Shares in NZ Farming Systems Uruguay surged by almost a third on Tuesday, after the Singapore-based food group Olam International issued a full takeover offer for the firm.
Olam currently controls 78% of the listed firm and is offering to buy the rest for 70c a share - a 15c premium on the closing price before Easter.
The company says the offer will give shareholders an opportunity to sell before they are called on to stump up more money through a potential capital-raising.
The firm had earlier flagged that it might have to raise more than $US100 million within the next year, in order to fund new capital expenditure and repay a loan.
Milford Asset Management's executive director, Brian Gaynor, says however that investors could do quite well from a capital-raising, as once some of the company's debt is repaid, its outlook will be considerably better than it has been in a long time.
Mr Gaynor says milk prices and production in Uruguay have improved substantially since Olam's previous 70c-a-share offer, which, he says, makes the current bid rather cheeky.
NZ Farming Systems Uruguay is urging shareholders not to sell while the offer is evaluated.