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Singapore’s takeover battle for Australian cotton producer Namoi Cotton (ASX: NAM) looks all but stitched up by Louis Dreyfus Company after a major shareholder expressed its support of a revised bid that values the company at $124 million.
The Australian subsidiary of Louis Dreyfus Company (LDC) has trumped an offer from fellow Singapore-based agribusiness Olam Agri Holdings by 2c per share in a bid to acquire the 83 per cent stake in Namoi Cotton that it does not already own.
The 61c-per-share offer price comprises a cash consideration of 60c per share plus a 1c special dividend declared on 17 April.
Samuel Terry Asset Management (STAM), as trustee for Samuel Terry Absolute Return Group which controls 23.3 per cent of Namoi Cotton shares, has declared that it intends to accept the offer.
In March, the shareholder had previously voiced its support of the Olam bid in the absence of a better offer.
Combined with the STAM stake, LDC will lift its Namoi shareholding to 40.3 per cent of - or just 9.8 percentage points shy of its minimum acceptance target of 50.1 per cent of Australia’s largest cotton ginner and its network of 10 gins in NSW and southern Queensland.
The latest offer from LDC is up from 50c per share in January, a figure that was adjusted for the 1c-per-share dividend payable following the execution of the deal.
However, investors appear to still believe a higher offer could be in the wings from Olam Agri Holdings as shares in Namoi Cotton shot to a peak of 64c in early trading. The shares were trading at 63c at 1.43pm (AEST), which is 2c above the LDC offer.
This is despite Namoi Cotton saying it does not intend to proceed with Olam’s non-binding proposal, which is subject to several conditions. Olam made its play for Namoi Cotton in March.
LDC, with a 16.99 per cent stake in Namoi, has been a long-term partner of the Australian cotton producer including a joint-venture partnership in the Namoi Cotton Alliance and Namoi Cotton Marketing Alliance.
The Singapore giant is a global agricultural merchant and processor with extensive interests in textiles, bioenergy, plant proteins, animal feed and pet food.
Olam has significant cotton interests in Australia after acquiring Queensland Cotton in 2007, while it also has investments in almond orchards and processing, employing more than 550 people in Australia.
LDC’s chief executive officer Michael Gelchie describes his company’s increased offer as a “strategic move that underscores our conviction in the potential of Australian agriculture”.
“This decision is aligned with our commitment to expanding LDC’s presence and service offering in the country, where the group has been active for over 110 years, with growing merchandising and processing operations in cotton, grains and oilseeds,” says Gelchie.
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