LDC Secures Regulatory Approval and Waives Conditions; Olam Agri’s Counterbid Still in Play
LOUIS Dreyfus Company (LDC) has achieved a significant milestone in its acquisition bid for Namoi Cotton, following the Foreign Investment Review Board (FIRB) approval. The move propels LDC closer to controlling Australia’s largest cotton ginning company, a strategic move poised to enhance its operations and service offerings in the region.
LDC’s bid has now become unconditional after FIRB’s endorsement and the Australian Competition and Consumer Commission’s (ACCC) recent decision to withdraw its opposition. The company has waived all remaining conditions, underscoring its commitment to the acquisition. This development provides Namoi Cotton shareholders with clarity and certainty regarding the transaction’s progress.
Tony Geitz, LDC’s Managing Director for Australia, expressed confidence in the deal, highlighting the company’s longstanding relationship with Namoi Cotton and its robust financial standing. “We are a natural owner for Namoi Cotton, given our established partnerships, joint ventures, and the trust we’ve built with Namoi’s team and growers,” Geitz stated. He emphasized that the acquisition would allow LDC to expand its ginning and packing operations, benefiting Australian growers with enhanced service and operational efficiencies.
Despite LDC’s progress, Olam Agri, the owner of Queensland Cotton and a rival bidder, remains a formidable contender. Olam has received backing from Namoi’s independent directors and its largest shareholder, Samuel Terry Asset Management. However, Olam’s bid is still pending FIRB approval and faces ACCC opposition. The ACCC’s initial findings indicated potential competitive issues with Olam’s proposal, particularly concerning market power and its impact on ginning services in the Lower Namoi Valley.
In response, Olam has extended its bid closing date to October 8, aiming to address regulatory concerns and strengthen its position. The competition between LDC and Olam reflects the high stakes involved, with both companies seeking to gain substantial control over Namoi Cotton’s operations. LDC currently holds a 20.1 percent stake in Namoi, while Olam owns 6.02 percent. The outcome of this bid is likely to have significant implications for the Australian cotton industry, influencing market dynamics and operational strategies.
Geitz noted that LDC’s offer, which closes on September 13, remains the only unconditional bid with regulatory approval. He urged Namoi Cotton shareholders to accept LDC’s offer, emphasizing that Olam’s bid faces considerable hurdles and potential delays.
As the bidding war continues, the outcome will hinge on regulatory approvals and shareholder decisions, shaping the future landscape of Australia’s cotton industry.
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