French giant Louis Dreyfus Company launches takeover bid for Namoi Cotton

Australia’s largest cotton gin company is set to change hands after a French agricultural merchant announced a buyout bid.

Australia’s largest cotton gin company could change hands as a giant French agricultural merchant launches a takeover bid.

Louis Dreyfus Company has issued a non-binding offer to acquire the balance of shares to take ownership of the ASX-listed Namoi Cotton.

LDC, which owns 17 per cent of Namoi, has said it wants to pay $0.51 per share. When the offer was issued Namoi’s shares were valued at $0.36, but as of Thursday closing they had bounced to $0.48.

Namoi Cotton executive chairman Tim Watson said: “This proposal builds on our existing relationship with LDC in our lint marketing and warehousing joint venture business for the past ten years.”

“Combining Namoi’s ginning business with LDC is designed to create a strengthened and sustainable business for our grower customers and staff.”

Following the proposed transaction, Namoi issued a statement that said Samuel Terry Asset Management Pty Ltd, which holds a 21.5 per cent shareholding interest in Namoi, supported LDC’s “non-binding indicative offer”.

Namoi also said its board had determined it was in the best interests of the company’s shareholders to accept the LDC offer.

As part of the takeover Namoi’s gins would run as usual, keep its Toowoomba head office and retain the Namoi Cotton brand name, LDC said in its statement.

Founded in 1962 and listed on the ASX in 1998, Namoi Cotton has grown since its first gin was built at Wee Waa in 1963, to now have 10 gins across northern NSW and southern Queensland.

Namoi Cotton owns NSW cotton gins at Boggabri, Hillston, Merah North, Mungindi, North Bourke, Trangie, Yarraman, while also has joint-venture sites at Moomin and Wathagar.

Last year the company returned to profit following three years of drought, delivering an EBITDA of $18.3 million, significantly up on the $2.6 million earnt in the previous financial year.

The potential takeover is conditional on Namoi providing LDC with certain exclusivity rights.

Namoi has agreed for due diligence to be conducted up to either the date a binding Scheme Implementation Agreement is signed, or January 31, 2024.

The Namoi Board is able to assess potentially superior proposals from any potential competing purchasers from December 27.