Dairy farming giant Van Diemen's Land Company (VDL) has rejected a takeover bid by an Australian company and revealed it wants to sell to an undisclosed foreign-owned private company.

The Melbourne-based OnCard International had entered into a sales agreement with the north-west Tasmanian company.

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.

But the $250 million takeover of the New Zealand-owned VDL will go to an unnamed foreign company, pending Foreign Investment Review Board (FIRB) approval.

Keith Sutton, chairman of VDL's parent company Taranaki Investment Management Limited, said in a statement the successful bid by the new buyer was "commercially superior".

He said other bidders "had been given every opportunity to put their best offer forward".

The identity of the buyer is subject to a full confidentiality agreement and will not be disclosed until the deal is finalised.

VDL chief executive David Beca said the offer from the successful bidder was a very good one.

"In the end the successful purchaser was prepared to offer significantly more than OnCard were," he said.

"And their offer was, other than FIRB approval, was unconditional."

Mr Beca said he was not concerned about the company remaining foreign owned.

He said the buyer was focused on growth and development, which would be good for the local community.

"For many people it would have been very nice to think that the company was locally owned," he said.

"But from the company's point of view, and everyone who works in the company or lives locally, the most important thing is will the company be well-funded?

"In this case there appears a very strong drive by the successful buyer to develop the company, to invest in the company to look to grow the company from a farming aspect and with associated business."

He said current employees would remain employed with their benefits transferred.

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