Global agriculture business Olam Agri has accrued 2,191,393 shares in Namoi Cotton Limited, which holds Australia’s largest network of cotton gins. Olam now owns a voting power of 1.07 per cent.
It comes amid an all-cash takeover bidding war of Namoi between Olam and another international agriculture business Louis Dreyfus Company.
Latest reports show that LDC already has more than an 18 per cent stake in Namoi Cotton, which had risen from 16.99 per cent following its own bid of $0.67 cents per share.
Olam had tabled a higher offer of $0.70 cents per share, which Namoi’s independent directors approved of and called on other shareholders to accept. In the same swoop, Namoi told shareholders to reject LDC’s takeover offer.
Olam Agri is headquartered in Singapore, but operates eight subsidiaries across Australia. This includes Queensland Cotton, its largest Australian subsidiary.
This latest update also follows alarm bells raised by the ACCC in its own published statement of issues outlining preliminary competition concerns with LDC’s proposed acquisition of Namoi.
The consumer watchdog raised concerns that the proposed acquisition by LDC would be likely to substantially lessen competition in the supply of cotton ginning services in the north of Western Australia and Northern Territory and the supply of cotton lint classing services.
The ACCC is also considering whether LDC’s proposed acquisition may substantially lessen competition in the marketing of cotton lint and seed.
“If this acquisition proceeds, LDC will be involved in operating the only two cotton gins in the north of Western Australia and Northern Territory,” ACCC commissioner Stephen Ridgeway said. “We are concerned it would result in LDC being able to reduce competition between these two cotton gins, which may result in higher prices or reduced service levels for ginning services.
“Growers benefit from competition between cotton gins, and once both are operational, the Katherine gin will be by far the closest competitor to the Kununurra gin.”
Meanwhile, Olam Agri owns and operates Queensland Cotton as a subsidiary. The ACCC is also undertaking a review of the Olam takeover, with findings expected to be announced on July 4.