LDC bid overtakes Olam’s in tussle for Namoi Cotton

Grain Central, April 29, 2024

LOUIS Dreyfus Company has announced plans to make an off-market takeover offer for Namoi Cotton, in response to a previous takeover proposal by competitor Olam Agri.

As part of this new takeover bid, LDC has increased its offer to 60 cents per share, plus a 1c special dividend, up from its initial proposal of 51c.

The offer is also higher than Olam’s March 21 bid of 59c per share via a scheme arrangement, or 57c per share under a proposed off-market takeover bid.

In a statement released to the ASX today, LDC chief executive officer Michael Gelchie said the company was “pleased to announce our cash offer for the remaining Namoi shares”.

“This decision is aligned with our commitment to expanding 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,” Mr Gelchie said.

He also called the proposal “a strategic move that underscores our conviction in the potential of Australian agriculture”.

Offer supported

In announcing the offer, Namoi Cotton said the offer “represents a significant premium” to the company’s historical market price, which was 35.5c at closing on November 27.

The company has indicated that if LDC moves forward with the bid unchanged, Namoi’s independent directors “intend to recommend that Namoi shareholders accept the takeover offer, in the absence of a superior proposal and subject to an independent expert concluding…that the takeover offer is fair and reasonable to Namoi shareholders”.

The statement noted that Sarah Scales, LDC’s appointed representative to the Namoi Board, abstained from the vote.

Namoi’s largest shareholder at 23.3pc, Samuel Terry Asset Management, has also backed LDC’s revised offer.

In its statement also released to the ASX, STAM said it intended to accept the offer in the absence of a superior bid.

Namoi has indicated that, as LDC’s current proposal trumps Olam Agri’s bid, it would not be moving forward with the offer from the Singapore-based agribusiness.

“Namoi notes that the proposed takeover offer from LDC represents a premium to both the proposed Olam scheme and the proposed Olam takeover and accordingly does not intend to proceed with Olam on the basis of its [non-binding indicative offer],” Namoi said in a statement to the ASX.

Namoi entered into a Scheme Implementation Agreement on January 18 with LDC to acquire the remaining 83pc of issued shares in Namoi that it does not currently own, by way of a scheme arrangement.

By accepting LDC’s offer in lieu of an arrangement with Olam, Namoi would be cleared of any obligations under the SIA.

These included the possibility of paying a break fee to LDC.

It was anticipated that this agreement would come into effect in the coming months, depending on ACCC and FIRB decisions.

LDC currently owns a 17pc interest in Namoi Cotton and operates two joint ventures with Namoi Cotton: Namoi Cotton Alliance and Namoi Cotton Marketing Alliance

Source: Namoi Cotton


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