Bidding war heats up as Olam Agri raises offer for Namoi Cotton

Sydney - Singapore’s Olam Agri increased its takeover bid for Namoi Cotton, just two days after independent directors at the Australian cotton producer recommended a rival offer from Louis Dreyfus Company.

Olam Group’s indirectly-owned subsidiary raised its bid to 75 Australian cents per share from 70 Australian cents, it said in a regulatory filing on Sept 13, valuing the company at A$154 million (S$135 million). The most recent offer from Louis Dreyfus, a Rotterdam-based crop trader that already owns more than a fifth of Namoi’s shares, values Namoi at A$138 million and is set to close on Sept 13. 

Namoi said its directors are considering their recommendations on both takeover bids, and that its biggest shareholder plans to accept the Olam Agri offer in the absence of a higher proposal, according to exchange filings on Sept 13.

The rival agricultural traders have been jostling to buy the processor since January in a bid to gain a bigger foothold in Australia’s cotton industry, the world’s sixth-biggest. Namoi’s independent directors rejected Olam Agri’s former offer in an exchange filing on Sept 11, despite it being marginally higher than Louis Dreyfus’ bid, citing greater uncertainty.

The Australian Competition and Consumer Commission (ACCC) is still assessing Olam Agri’s bid after conditionally approving Louis Dreyfus’ in August. Louis Dreyfus also received approval from Australia’s Foreign Investment Review Board last week after it agreed to measures that would allay some concerns. 

Mr Ashish Govil, managing director of Queensland Cotton and country head for Olam Agri Australia, said in the Sept 13 announcement: “While the ACCC approval process has taken longer than anticipated, we remain confident and are committed to working through the process to win approval, including proposing remedies aimed at satisfying the ACCC’s concerns.”

The Singapore firm has proposed remedies including a gin divestment and a ProClass share divestment to the ACCC, Mr Govil added.

Mr David Blennerhassett, content strategist at Ballingal Investment Advisors, said: “The bump (in Olam Agri’s offer) doesn’t change the ACCC application process. It’s more a tactic of stopping investors from tendering into LDC’s (Louis Dreyfus) offer and/or LDC buying on-market at, or around, its offer price.”

Louis Dreyfus, Namoi Cotton’s second-largest shareholder, has increased its voting power in the company to 21.3 per cent from 20.1 per cent, an exchange filing showed on Sept 13. BLOOMBERG, REUTERS