A Chinese-owned dairy company wanting to buy Synlait has received Government approval to buy public land Synlait occupied "informally".

The Overseas Investment Office (OIO) has approved an application by SFL Holdings Ltd to buy or lease a stewardship area, a Crown-owned part of the bed of the Rakaia River and a paper road vested in the Selwyn District Council.

SFL Holdings, 74 per cent owned by Shanghai Pengxin, the company which bought the Crafar farms in the North Island, has made a takeover offer for all the shares in Synlait Farms Ltd.

The OIO said the takeover application revealed Synlait Farms was "informally occupying certain areas of Crown and territorial authority owned land".

"The applicant has therefore sought consent to regularise the occupation of these areas."

It ruled SFL had satisfied criteria under the Overseas Investment Act regarding creation of jobs, increased export receipts, greater productivity, additional investment for development purposes, increased processing and indigenous vegetation.

Synlait Farms chief executive Juliet Maclean said the area involved was about 10 hectares in the Rakaia/Dunsandel area and not regarded as significant.

The paper road had been farmed by the company, which was not unusual for paper roads in the area. The stewardship area was in the middle of one of the farms and just "green grass".

The part of the bed of the Rakaia River in issue was a block to which the boundary pegs had been lost or misplaced.

The takeover has received 90 per cent Synlait Farms shareholder approval and New Zealand's Overseas Investment Office approval but awaits approval from several Chinese authorities.