French agricultural giant Louis Dreyfus Company to buy Namoi Cotton
Australia’s biggest cotton producer will change hands after a deal was struck with a massive French food and agriculture merchant. See the details.
A giant French agricultural merchant has signed a binding agreement to acquire Australia’s biggest cotton producer, valuing the company at more than $104 million.
The Asian arm of Louis Dreyfus Company has signed a binding agreement to acquire the remaining 83 per cent of shares of ASX-listed Namoi Cotton Limited after announcing its intention to buy the 62-year-old Australian company in November last year.
Via a Scheme of Arrangement, the privately-owned Louis Dreyfus Company will pay $0.51AUD per share including a dividend of $0.01AUD, with the deal expected to be completed by the middle of this year.
“As a longstanding partner of LDC for the past decade, we look forward to working closer with a leading global agribusiness and cotton merchant,” Namoi Cotton executive chairman Tim Watson said.
“With our combined capability, we will further develop our excellence in cotton processing and marketing, delivering additional value to Australian cotton growers.”
Louis Dreyfus Company head of cotton Joe Nicosia said the transaction aligned with the company’s long-term commitment to Australian agriculture.
“The addition of Namoi Cotton into our Australian cotton operations also aligns with LDC’s global strategy to reinforce its leadership in core merchandising activities,” he said.
“In this case by strengthening our service to local cotton farmers, through an expanded ginning and logistics footprint.”
The terms of the deal include a 44 per cent premium to the share price of Namoi Cotton, which sat at $0.35 per share prior to the announcement of Louis Dreyfus’s initial proposal.
The takeover is subject to conditions, including FIRB approval.
Major Namoi Cotton shareholder, Samuel Terry Asset Management, which holds a 21.5 per cent stake in the company, and the Namoi Cotton board have supported the takeover bid.
Last year Namoi Cotton chief executive John Stevenson stepped down with the company also undertaking a “strategic review”.
Louis Dreyfus Company currently owns a 17 per cent interest in Namoi Cotton and operates two joint ventures with Namoi Cotton, Namoi Cotton Alliance (NCA) and Namoi Cotton Marketing Alliance (NCMA).
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.
As part of the takeover, Louis Dreyfus Company intends to run Namoi Cotton’s 10 gins as usual, keep its Toowoomba head office and retain the Namoi Cotton brand name.
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