NAMOI Cotton shareholders have been advised to reject the off-market cash takeover bid from Louis Dreyfus Company to acquire all Namoi shares LDC does not already own for 67 cents.

This figure is 3c below the most recent bid Namoi has received from Olam, the parent of ginner Queensland Cotton.

Issued today, the advice comes from Namoi’s independent directors, namely chair Tim Watson, and non-executive directors Robert Green, Juanita Hamparsum, and Ian Wilton, as well as James Davies.

Mr Davies is the nominee for Samuel Terry Asset Management, which as the owner of 25 percent of shares, is Namoi’s largest stakeholder.

LDC already owns 17pc of Namoi shares, and in contrast to her fellow board members, LDC nominee Sarah Scales has therefore abstained from making a recommendation to Namoi shareholders.

“Your independent directors unanimously recommend that you reject the offer,” Namoi has today advised its shareholders in a target’s statement.

“STAM has notified the Namoi board…that it intends to accept the Olam takeover offer in respect of all the Namoi shares that it holds…in the absence of a superior proposal and subject to the independent expert concluding and continuing to conclude that the Olam takeover offer is fair and reasonable to Namoi shareholders,” Namoi’s statement said.

Namoi has advised shareholders that without support from STAM, it may be difficult for the offer to reach the 50.1pc minimum acceptance condition, and noted that LDC may elect to waive this condition, which indicates Namoi’s acceptance of the Olam offer is far from a done deal.

Namoi is Australia’s largest cotton ginner, and Namoi puts its share in the Australian processing task at 21pc, ahead of Australian Food and Fibre at 19pc, Olam as the parent of Queensland Cotton on 18pc, and LDC on 10pc, with independent ginners handling the rest.

Namoi has commissioned an independent expert’s report on both the LDC and Olam takeover offers from BDO Corporate Finance, which concludes the LDC is is “neither fair nor reasonable” to Namoi shareholders.

The report notes that Namoi shares have consistently traded on ASX at more than 67c, the current offer price from LDC.

Namoi is expected to lodge a separate target’s statement in response to the Olam offer on May 31.

Takeover timeline

January 19: Namoi announces it has entered into a binding agreement in which LDC would acquire all Namoi shares at 51c;

March 21: Namoi announces  it had received a non-binding offer from Olam Holdings to acquire all Namoi shares for a total cash consideration of 59c per share, or 57c off-market;

April 29-30: LDC proposes an off-market takeover offer which saw LDC and Namoi terminate the previous agreement, and lifts its offer to acquire all Namoi shares for a total cash consideration of 60c;

May 2: Olam announces its intention to make an off-market takeover offer for all Namoi shares of 66c, increasing to 70c if Olam obtains at least 90pc of shares on issue before the end of its takeover offer period;

May 7: LDC announced a lift in its off-market takeover offer to 67c;

May 8: Olam announces an intention to make an off-market takeover offer to acquire all Namoi shares for 70c.

Source: Namoi Cotton