Singapore-based Olam Agri has lifted its bid to takeover Australia's biggest cotton processor Namoi Cotton, while increasing its stake in the company.
Singapore-based Olam Agri has lifted its bid to takeover Australia's biggest cotton processor Namoi Cotton, while increasing its stake in the company.
Olam Agri Holdings today announced an increase of offer price from 70 cents to 75 cents cash per Namoi share, valuing the cotton business at $154 million.
The company has also upped its shareholding in Namoi, from 6 per cent to 16.34 per cent today.
It comes after the Foreign Investment Review Board last week approved a bid from Olam's competitor Louis Dreyfus Company for Namoi Cotton, of 67 cents per Namoi share.
LDC has also recently increased its stake in Namoi to 21.3 per cent.
It complicates one of the conditions of Olam’s offer to acquire a 90 per cent interest in Namoi.
Announcing the updated offer to the market, Namoi said its directors were considering the recommendations of both the Olam and LDC offers.
Namoi’s biggest shareholder, Samuel Terry Asset Management (25 per cent), has flagged its acceptance of the revised bid by Olam.
Harvest Lane, which owns 7 per cent of Namoi, has also announced it intended to accept Olam's updated offer of 75 cents a share.
In its announcement, Olam Agri said it has entered into agreements to acquire a further 9.9 per cent shareholding in Namoi through a buyout of shares from STAM and Harvest Lane.
The share purchase is estimated to be settled on September 18 at 75 cents per Namoi share, Olam said.
Despite the revised offer, Olam continues to have issues with the Australian Competition and Consumer Commission.
The ACCC backed LDC’s offer, with several conditions, but had concerns over a potential cotton gin monopoly if Olam’s bid was accepted.
Namoi is Australia’s largest cotton company with 10 gins, operating in Queensland and NSW, and building a foothold in Western Australia.
The company has a 17 per cent stake in Kimberley Cotton Company, which is building a $60 million cotton gin at Kununurra.
Olam already owns Queensland Cotton.
Queensland Cotton managing director Ashish Govil said Olam remained confident on ACCC approval, having proposed remedies to meet its concerns.
“As we have stated before, our proposed acquisition will not substantially lessen competition in the Australian cotton industry,” he said.
“Those familiar with the ginning services market understand the competitive nature of acquiring cotton to gin, practically making concentration of gin ownership less of an issue in today’s market.
“We have submitted remedies, including a gin divestment and ProClass share divestment, and now await ACCC’s feedback on these proposals.”
Olam Agri Fibre, Agri-Industrials & Ag Services chief executive Ashok Hegde said the offer had a superior value.
In its announcement, Olam Agri said its updated offer price was almost 12 per cent more than Louis Dreyfus’ bid.
“We are pleased to increase our bid from seventy cents to seventy-five cents [Australian] for the acquisition of Namoi,” Mr Hegde said.
“We present a distinctly superior offer price for Namoi compared to LDC, demonstrating our steadfast belief in its value and potential.
“I am confident that combining our two highly complementary businesses will unlock opportunities for both businesses, Australian cotton growers and the broader industry.”
Shares in Namoi Cotton last traded at 70 cents each, up 3.70 per cent as of 1.08pm AEST today.
