Australia’s largest cotton ginning company, Namoi Cotton (ASX: NAM), is one step closer to being acquired by commodities giant Louis Dreyfus Company Asia (LDC) after a $105 million offer initially floated two months ago has today become official.
Namoi revealed to this ASX this morning that the deal, which would see LDC acquire the 83 per cent of shares in the company it doesn’t already own for 51 cents per share (cps), had turned into a binding offer.
The offer price is pitched at a 44 per cent premium to Namoi’s closing price of 35.5cps on 28 November 2023.
The price being offered by LDC includes a 1c dividend, making the cash consideration 50c a share.
Each director of Namoi intends to support the transaction under the condition a superior proposal is not put forward and an independent expert concludes the offer is in the best interests of shareholders.
Samuel Terry Asset Management, which holds a 21.5 per cent stake in the Namoi, has already expressed its willingness to vote in favour of the takeover bid.
“Combining Namoi’s ginning business with LDC is designed to create a strengthened and sustainable business for our grower customers and staff and providing Namoi shareholders the opportunity to realise value for their shares at an attractive premium to the share price prior to the announcement of LDC’s indicative proposal,” Namoi Cotton Executive Chairman Tim Watson said.
“The implementation of the scheme is expected in mid-2024. Until then the Namoi team will be focused on preparing for and delivering, business as usual, for the forthcoming ginning season to our grower customers.
“We will also be progressing with the delivery of our obligations to construct and subsequently operate the new gin at Kununurra for the Kimberley Cotton Company.”
LDC, a global agricultural merchant and processor with extensive interests in textiles, bioenergy, plant proteins, animal feed and pet food, is Namoi’s joint-venture partner in Namoi Cotton Alliance and Namoi Cotton Marketing Alliance.
LDC employs around 17,000 staff worldwide and is active in 100-plus countries. According to the company’s website, they originate, process and transport approximately 80 million tons of product per annum.
A successful takeover offer would see LDC take control of Australia’s largest cotton ginner and its network of 10 cotton gins in NSW and southern Queensland.
Namoi Cottons employs more than 150 people, who help process approximately 84,000 cotton bales each week across its three warehouses in Goondiwindi, Wee Waa and Warren.
"The proposed transaction reflects LDC’s long-term commitment to growing with Australia, promoting sustainable agricultural practices, supporting farming communities and contributing to local economic growth,” LDC Head of Cotton Joe Nicosia said.
“The addition of Namoi Cotton into our Australian cotton operations also aligns with LDC’s global strategy to reinforce its leadership in core merchandising activities – in this case by strengthening our service to local cotton farmers, through an expanded ginning and logistics footprint.”
The transaction is also subject to regulatory approvals, including from the Australian Competition and Consumer Commission (ACCC), and the Foreign Investment Review Board (FIRB), in addition to court approval.
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