NAMOI Cotton is considering the latest offer from Olam Agri to keep the bidding war for Australia’s largest cotton ginner alive.
Olam today announced it has increased its offer price for the ASX-listed company to 75 cents from 70 cents previously to compete against Louis Dreyfus Company Melbourne Holdings’ standing bid of 67c.
In a statement, the Singapore-based Olam Agri said its offer was “consistent with Olam Agri’s superior valuation of the Namoi business compared to LDC.”
“We present a distinctly superior offer price for Namoi compared to LDC, demonstrating our steadfast belief in its value and potential,” Olam Agri chief executive officer fibre, agri-industrials and ag services Ashok Hegde said.
“I am confident that combining our two highly complementary businesses will unlock opportunities for both businesses, Australian cotton growers and the broader industry.
“We urge Namoi’s board and shareholders to recognise the superior value of our offer.”
Namoi Cotton’s independent directors this week recommended shareholders accept LDC’s offer, which had received Australian Competition and Consumer Commission and Foreign Investment Review Board approval.
However, Olam Agri is upbeat about gaining comparable approvals.
“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,” Queensland Cotton managing director and Olam Agri Australia country head Ashish Govil said.
“As we have stated before, our proposed acquisition will not substantially lessen competition in the Australian cotton industry,” Mr Govil said.
“Those familiar with the ginning services market understand the competitive nature of acquiring cotton to gin, practically making concentration of gin ownership less of an issue in today’s market.
“We have submitted remedies, including a gin divestment and ProClass share divestment, and now await ACCC’s feedback on these proposals.”
Olam Agri has said it “can unlock the future value of Namoi through its culture of innovation and operational excellence”.
“The recent path-breaking initiative for the first ever cotton export through the Port of Darwin by Queensland Cotton is testament to how Olam Agri can co-operate with industry participants and peers and create operational advancements and unlock value for the industry.”
Samuel Terry Asset Management holds 25 percent of Namoi shares, making it the company’s largest shareholder.
STAM managing director Fred Woollard today emailed Namoi’s directors to encourage them to engage with Olam in relation to its revised offer.
“STAM confirms that it considers the revised Olam offer to be superior to the LDC offer,” Mr Woollard said.
The market is awaiting an update from Namoi Cotton.
“In light of the revised offer, the independent directors are considering their recommendations in respect of the offers from both Olam and Louis Dreyfus Company Melbourne Holdings, and will provide an update to the market in due course.”
Source: Olam Agri, Namoi Cotton