LOUIS Dreyfus Company has applied to the Australian Government’s Takeover Panel seeking orders to prevent or unwind an off-market transaction between Olam Agri and two key shareholders which materially increased the rival bidders’ stake in Namoi Cotton.

Last week it was announced that Olam Agri had increased its stake in the Australian ginner to 16.34 percent after acquiring a 9.99pc share via an off-market, unconditional deal with key shareholders Samuel Terry Asset Management (STAM) and Harvest Lane Asset Management (HL).

As part of the agreement, STAM and HL received 75c per share for the holdings with a settlement date of September 18.

The transaction now means Olam has a “blocking stake” in Namoi and can prevent rival LDC from acquiring the minimum 90pc share needed to commence a compulsory acquisition process for the remaining shares.

Before this announcement, Olam owned just 6.02pc of Namoi shares.

LDC believes the circumstances surrounding the transaction “are unacceptable” as it is “preventing there being an efficient, competitive and informed market in Namoi shares”.

The Dutch-based agricultural company said all other Namoi shareholders “have not had a reasonable and equal opportunity to sell their Namoi shares unconditionally to Olam” as the current offer remains “highly conditional and uncertain”.

It said this action had resulted in a breach to section 623 of the Corporations Act 2001 (Cth).

LDC is seeking interim orders blocking the transaction if it has not occurred, or unwinding it if it has been finalised, and preventing Olam from acquiring more shares except as part of the on-market offer.

The Takeover Panel, a peer-review body which regulates corporate control transactions, is yet to appoint a sitting panel and has not decided whether to conduct proceedings based on the application.

It also makes no comment on the merits of the application.

Namoi backs Olam

Olam’s bid has the backing of the Namoi independent directors, STAM and HL.

On September 13, Olam increased its offer to 75c per share, a rise of 5c per share and 8c higher than LDC’s current bid.

After previously recommending shareholders accept LDC’s offer, Namoi’s independent directors, on Friday, switched their support to Olam.

In a statement to the ASX, the company said Olam’s increased offer “now values Namoi at a substantial premium” to the historical market price and was “a material premium in comparison to the price under the LDC Offer”.

It said Olam’s bid was also more likely to obtain Australian Competition and Consumer Commission regulatory approvals as the Singapore-based agribusiness had proposed several remedies to the initially concerns raised by the corporate watchdog.

Since the release of the Statement of Issues on June 20, Olam said it was “continuing to engage constructively with the ACCC” and was “confident in its prospects of obtaining this approval”.

These remedies include divesting from a gin in the Lower Namoi Valley and its shares in Proclass.

ACCC’s final decision on the proposed acquisition is expected to be delivered on October 31.

On Friday, LDC extended its offer which was due to expire at the close of business that day to September 27.

LDC currently owns 22.23pc voting power in Namoi, up from 21.3pc announced in previous notice released on September 13.

Source: ASX, Namoi, LDC