Bidding war drives latest Namoi Cotton offer to $145 million

A duel between two foreign agribusiness giants for Australia’s largest cotton producer has reached new heights. See the latest.

A bidding war for the ASX-listed Namoi Cotton has driven the latest offer to buy Australia’s largest cotton gin company to a value of almost $145 million.

Singapore-based agribusiness giant Olam on Wednesday increased its off-market takeover offer to acquire all of Namoi’s shares, raising its bid to $0.70 cash per share.

In the past two weeks there has been a flurry of activity between competing buyers, Olam Agri and French agricultural merchant, the Louis Dreyfus Company, with both revising their offers multiple times.

On May 2, Olam Agri Australia Pty Ltd, a wholly owned subsidiary of Olam Agri Holdings Limited, raised its offer to $0.66 a share, conditional on it securing 50.1 per cent of Namoi shares, while also jumping to $0.70 if it reaches 90 per cent.

Samuel Terry Asset Management Pty Ltd, which holds a 25 per cent shareholding interest in Namoi, issued a statement on Wednesday afternoon supporting Olam’s latest bid.

Louis Dreyfus Company, which already owns about 17 per cent of Namoi Cotton shares, announced on May 3 it would not accept Olam’s offer and on May 7, it upped its bid to $0.67 a share - 1 cent greater than Olam Agri’s May 2 bid, and 31 per cent higher than its initial offer of $0.51 a share in January.

Olam’s latest offer now applies regardless of whether or not Olam obtains a relevant interest in at least 90 per cent of Namoi shares prior to the end of the offer period.

A bidding war for Namoi Cotton has reached a new high of almost $145 million. Picture: Supplied.

Olam also said its latest $0.70 offer was dependent on the same conditions as its May 2 bid including: Olam having obtained a relevant interest in at least 50.1 per cent of the Namoi shares and receipt of regulatory approvals from FIRB and ACCC.

The latest Olam offer is 97 per cent greater than the Namoi Cotton share price of $0.355 on November 27, 2023, the day before Louis Dreyfus Company launched its initial takeover bid.

The bidding war has also driven Namoi shares to their highest value since September 1999, trading at $0.765 on May 8.

Olam Agri launched its bid for Namoi ownership in March with a starting offer of 59c, or 57.2c if the transaction occurred off-market.

LDC’s counter offer of $0.60 was lodged on April 29, before Olam Agri revised their offer to $0.66 three days later.

The ACCC is expected to release its findings into LDC’s proposed acquisition of Namoi on May 16.

Both Olam Agri and the Louis Dreyfus Company have substantial interests in the Australian cotton industry, following Olam’s acquisition of Queensland Cotton in 2007, while LDC bought Dunavant’s Australian cotton business in 2010.

Founded in 1962 and listed on the Australian Securities Exchange in 1998, Namoi Cotton established its first cotton gin at Wee Waa in 1963, near Narrabri.

Namoi Cotton has an annual ginning capacity of 1.6 million bales annually and 10 cotton gins in NSW and southern Queensland, as well as three warehouse facilities with a combined static capacity for half a million bales.