Louis Dreyfus sews up Namoi Cotton takeover

Jan. 23, 2024 | 5 Min read
Shareholder support notwithstanding, Louis Dreyfus (LDC) has sewn up a deal which will see it acquire the 83 per cent of Namoi Cotton shares it doesn’t already own.

Shareholder support notwithstanding, Louis Dreyfus (LDC) has sewn up a deal which will see it acquire the 83 per cent of Namoi Cotton shares it doesn’t already own.

Namoi Cotton has 10 cotton gins across NSW and Queensland – with its Kununurra operation yet to be commissioned.

The proposed acquisition – through a share implementation agreement – would see Namoi shareholders receive at least 50 cents per share. When the implementation was announced on January 19, Namoi shares closed at 49 cents.

While shareholders will have the final say at a vote in May, Namoi chief executive Tim Watson says the deal already has the backing of Samuel Terry Asset Management, its largest shareholder, as well as other key major shareholders.

Mr Watson says if agreed at the meeting the acquisition could be completed within a couple of months.

The French owned and Singapore based multinational spans the agriculture, food processing, shipping, and finance industries.

With average annual sales around $120 billion it accounts for about 10 per cent of global agricultural product trade flows.

It is also the world’s largest rice and cotton trader, number two in the world sugar market and top three in copper, zinc and lead concentrate.

LDC owns and manages hedge funds, a fleet of oceangoing ships and telco infrastructures and with a presence in more than 100 countries it employs about 22,000 people.

Mr Watson says until the scheme comes into effect 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 is already up and running in Australia through its partnership with Western Australia Northern Territory Cotton, running the Katherine cotton gin, which opened in the NT in late 2023.

“Namoi's network of cotton gins and the business relationships it has built over the past 62 years are complementary to LDC's activities,” LDC's head of cotton Joe Nicosia says.

"We strongly believe the move announced (the takeover agreement) today will add value to both entities."

Mr Watson told the ABC that LDC conducted an "exhaustive" due diligence process before entering into the agreement with Namoi.

"It's safe to say there's probably not a stone left unturned, and I think that's just a big company being cautious about any acquisition that they make," Mr Watson said.

"They were actually really pleasantly surprised with what they found when they looked under the bonnet."

Mr Watson said shareholders would vote on the deal in May, and if they supported it, the acquisition could be completed by mid-year.

"If they vote in favour of the deal – [and] our major shareholders have already indicated they're supportive – we anticipate that should be finalised by sometime in June.

Categories Agribusiness

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