The foreign-owned company set to take over Australia's oldest dairy farming company is already being warned against clearing to expand operations.

New Zealand-owned dairy giant Van Diemen's Land Company (VDL) has rejected a takeover bid by Australian company OnCard, and revealed it would sell to an undisclosed foreign-owned private company.

VDL currently has Tasmanian approval to expand its operations by clearing some native vegetation for dairying, but Tasmanian Conservation Trust's Peter McGlone has urged the new owners to leave the forests alone.

"We encourage any new owner to abandon those forest clearing proposals," he said.

"If they're interested in being seen by their customers and buyers as sustainable then clearly they should abandon any large scale clearing of native forest.

"These areas are the habitat of the tiger quoll and the Tasmanian devil and I think that all consumers will be worried about buying milk from a company that clears endangered species habitat."

VDL CEO David Beca said the company would be well-funded under the new owner, which offered significantly more money than OnCard.

He said the buyer intended to expand the existing dairy operations.

"My understanding is there is a strong wish to see the business grow," he said.

"So those plans could well happen, could start in a reasonably short time frame."

After conducting an in depth environmental impact study, the company has revised a proposal to clear native vegetation down from 3,500 hectares to 1,806 hectares.

Seventy per cent of the native vegetation on Woolnorth would be protected under the plan.

In February 2013, it was determined the company would also need federal approval to press ahead with expansion plans because the area is home to the endangered Tasmanian devil.

The company has not made a formal application to the Federal Government yet to clear any of the 1,806 hectares marked for expansion.

VDL has operated on its original royal charter land grant longer than any other company in the world, gifted by King George IV in 1824, and includes 25 diary farms in the state's north-west.

If OnCard had been successful, it would have been the first time the company had been 100 per cent Australian-owned in its 190-year history.

OnCard International is now seeking legal advice over the matter.

OnCard's Rob Woolley said he was disappointed and that his company had an unconditional contract with VDL to buy all of its properties, with the exception of shareholder approval, set for mid-December.

"We were to pay the price set by the vendor and we were advised that they were using a technicality in the clause, in the agreement, and that they had sold the property to someone else," he said.

The $250 million sale of VDL will now go before the Foreign Investment Review Board.

VDL milks 17,890 cows over 7,062 hectares and saw record production last year.