Agri-business giant Olam Agri Holding Pte Ltd – which is based in Singapore – has pushed out its bid to acquire Namoi Cotton Ltd (ASX:NAM) for a third time, to October 8, as the bidding war between it and Louis Dreyfus Company (LDC) for Namoi continues.
In its original proposal, Olam Agri was offering shareholders $0.66 per Namoi share, but this was increased to $0.70 cents in the same month, as takeover challenger LDC had upped its offer to $0.67 cents per share.
Also in May, Olam seemed to be winning the bidding war as a major shareholder in Namoi Cotton – Samuel Terry Asset Management Pty Ltd – which holds a 25% interest in the former – announced its backing of the Singaporean group’s offer.
However, the deal is yet to be done, and Olam has since then announced three extensions to its offer – in June, July, August and September – while in the background, the ACCC has raised concerns about the potential impact of this takeover on local competition.
Additionally, the regulator noted that the acquisition would mean Olam had interests in two cotton grading companies handling 80% of all cotton in Australia (the second one being through acquisition Queensland Cotton), and could therefore manipulate the Australian cotton market to its own benefit.
The ACCC had previously expressed similar concerns about the Louis Dreyfus (LDC) bid, saying it could weaken competition in the supply of cotton ginning services in northern Western Australia and the Northern Territory, as well as lessening competition in the marketing of cotton lint and seed.
However, last month, the regulator said it would not oppose LDC’s takeover bid, accepting court-enforceable steps taken by Louis Dreyfus Company BV and its subsidiaries to divest its shares in ProClass Pty Ltd – which amounted to 20% – and to terminate its joint venture with WANT Cotton Pty Ltd, through which it would manage and operate a cotton gin near Katherine in the Northern Territory.
ProClass and Australian Classing Services (ACS) – which Namoi owns outright – provide cotton lint classing services, meaning that LDC’s steps to divest from the former would ensure that it did not have investment in the two companies which provide 80% of Australia’s cotton lint.
Namoi shares have been trading at 68 cents.