The share battle for Namoi Cotton just got more expensive with European commodities giant, Louis Dreyfus Company, adding 20 per cent to its bid price to overtake Olam Agri's quest to get full control of the Australian ginning group.
Louis Dreyfus has ditched its plans for a share scheme agreement to instead make an off-market all-cash takeover priced at 60 cents a share - up from the multinational's original 50c offer late last year.
The deal also offers shareholders payment of a further one cent/share special dividend, as flagged in the previous bid.
It values Australia's biggest cotton ginning business at a total $125 million - or about $3m more than Olam has indicated it may pay.
Namoi's board of directors confirmed it will recommend shareholders accept the latest takeover deal, in the absence of a superior proposal.
The Louis Dreyfus bid would also be subject to an independent expert concluding the latest offer wass fair and reasonable to Namoi shareholders.
Namoi's biggest shareholder, Samuel Terry Asset Management (23.3pc) has swung its support back to LDC, too, having earlier switched to back the Olam offer.
Louis Dreyfus Company's new plans would require a minimum 50.1pc approval by shareholders, plus consent from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
Last month Singapore-based Olam launched its own play for Namoi with a 58c share offer, plus the one cent special dividend to cover the dividend payment confirmed by Namoi on April 17 - valuing its full takeover intentions at $122m.
Olam, which owns Queensland Cotton, also pitched a potential alternative total cash offer to buy more than 50pc of Namoi's shares, but that proposal was worth slightly less at a total of 57c/share (including the dividend).
LDC, already Namoi's marketing partner and the ginning company's second biggest shareholder (with 17pc), wants to buy all the remaining 83pc of shares it does not currently own.
Potential in Australia
"We are pleased to announce our cash offer for the remaining Namoi shares - a strategic move that underscores our conviction in the potential of Australian agriculture," said LDC's chief executive officer, Michael Gelchie.
"This decision is aligned with our commitment to expand 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."
Although a relatively modest player in the global cotton ginning industry, LDC has three gin sites in Australia in Emerald, Dalby and Moree, and is now managing the newly-opened WANT Cotton gin near Katherine in the Northern Territory.
Namoi has 10 first stage lint processing operations in NSW and southern Queensland and is also moving into northern Australian as a partner in the new Ord Irrigation Area gin project.
Construction of the new Kununurra gin is being managed by Namoi and is set to be completed early next year.
Do nothing, just yet
Namoi Cotton executive chairman, Tim Watson, responded to LDC's latest bid saying shareholders were not expected to take any action at this point and the company would keep the market abreast of any material developments.
He said the company had again agreed to certain key terms with LDC, including a break fee payable by Namoi or Louis Dreyfus if either party chooses to consider other options
As part of the transaction, Blackpeak Capital is acting as financial advisor to Namoi, with KWM as legal advisor, while LDC's move is being backed by Dutch banking giant, UBS, with legal support from Arnold Bloch Leibler.
Namoi, which also owns cotton and cottonseed storage warehouses and grain packing facilities, has been a cotton lint marketing partner with LDC for a decade via its Namoi Cotton Alliance and the Namoi Cotton Marketing Alliance joint ventures.
The French-owned, but Netherlands headquartered, Louis Dreyfus Company is a big cotton trader and prominent across a big spectrum in the farm commodities market.
The company, founded in 1851, has operated in Australian grain markets since the early 1900s, and is active in 100 countries, trading about 80m tonnes of agricultural products annually.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
