Louis Dreyfus clears hurdle in $138 million Namoi Cotton bid

The ACCC will not oppose the French agribusiness giant’s takeover of Namoi Cotton after they committed to address concerns. See the details.

The competition watchdog will not oppose the Louis Dreyfus Company’s proposed takeover of Namoi Cotton, after the French agribusiness giant committed to addressing competition concerns.

The ACCC announced on Thursday, after accepting a court-enforceable undertaking, that Louis Dreyfus Company B.V. and its subsidiaries will divest its shares in ProClass Pty Ltd and terminate its joint venture with WANT Cotton Pty Ltd, two existing Australian cotton enterprises.

A giant agricultural merchant, the LDC Group already owns 20 per cent of ProClass while Namoi Cotton owns 100 per cent of Australian Classing Services (ACS), both of which supply cotton lint classing services.

The LDC Group also has a joint venture with WANT Cotton for the operation and management of a cotton gin near Katherine, NT.

The ACCC said it was concerned LDC’s proposed acquisition would be likely to substantially lessen competition in the supply of cotton lint classing services, while also substantially lessening competition in the supply of cotton ginning services in the north of Western Australia and the Northern Territory.

Namoi Cotton operates 10 cotton gins at nine sites across NSW and Queensland, including at Goondiwindi. Picture: File

“Without terminating its joint venture with WANT Cotton, the LDC Group would have operated the only two cotton gins in the north of Western Australia and the Northern Territory,” ACCC deputy chair Mick Keogh said.

“Without the divestiture, there was a risk that ProClass and ACS would not compete with each other effectively, given the LDC Group’s respective part ownership and full ownership of these businesses.

“This could have resulted in increased cotton classing prices or a reduction in the quality of classing services in Australia.”

The LDC Group’s offer to acquire Namoi Cotton is currently before Namoi shareholders following its May 7 bid of $0.67 a share.

Shareholders are also considering a competing bid from Singapore-based Olam Agri, which offered $0.70 a share on May 8, but is also the subject of an ACCC investigation, where a decision is due to be delivered on August 22.

In a statement of its own on Thursday, Olam Agri said Namoi shareholders should not accept LDC’s offer before the ACCC makes its final decision.

Namoi independent directors have unanimously recommended that shareholders accept the Olam Agri offer, while Samuel Terry Asset Management, Namoi’s largest shareholder at 25 per cent ownership, has also advised it intends to accept the Olam Agri offer.