Louis Dreyfus Company Emerges Victorious in Namoi Cotton Takeover Bid

In what appears to be the denouement of a takeover saga, Louis Dreyfus Company, headquartered in Singapore, is poised to secure the acquisition of Australian cotton producer Namoi Cotton (ASX: NAM) for a substantial sum of $124 million.

Louis Dreyfus Company’s Australian arm has outmaneuvered its Singaporean counterpart, Olam Agri Holdings, by offering 2 cents more per share in a bid to acquire the remaining 83 per cent stake in Namoi Cotton that it does not currently own. The revised offer values Namoi Cotton at 61 cents per share, inclusive of a special dividend of 1 cent declared on April 17th.

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Key to this victory is the backing of major shareholder Samuel Terry Asset Management (STAM), which controls 23.3 per cent of Namoi Cotton shares. STAM, trustee for Samuel Terry Absolute Return Group, has expressed its intent to accept Louis Dreyfus Company’s offer, marking a significant shift from its previous support of Olam’s bid.

Louis Dreyfus Company’s stake in Namoi Cotton will rise to 40.3 per cent with the inclusion of STAM’s shares, bringing it tantalizingly close to its minimum acceptance target of 50.1 per cent.

Despite this, investors seem to speculate on the possibility of a higher bid from Olam Agri Holdings, evident in Namoi Cotton’s shares surging to 64 cents in early trading, exceeding Louis Dreyfus Company’s offer by 2 cents.

Namoi Cotton has signaled its reluctance to proceed with Olam’s non-binding proposal, citing various conditions attached to it. Olam initially made its bid for Namoi Cotton in March.

Louis Dreyfus Company, with its 16.99 per cent stake in Namoi Cotton, has maintained a longstanding partnership with the Australian cotton producer, including joint-venture agreements. The company, a global agricultural giant, is deeply invested in various sectors including textiles, bioenergy, and animal feed.

Michael Gelchie, CEO of Louis Dreyfus Company, views the increased offer as a strategic move, emphasizing the company’s commitment to bolstering its presence in Australian agriculture. Gelchie cites Australia’s significance in LDC’s operations, spanning over a century, and underscores the potential for growth in cotton, grains, and oilseeds sectors.

Louis Dreyfus Company’s impending acquisition of Namoi Cotton underscores its ambition to further entrench itself in Australia’s agricultural landscape, while signaling a significant shift in ownership dynamics within the industry.

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