International farming business Olam Agri has bumped up its takeover offer of Australian ginning business Namoi Cotton Limited to $0.75 per share. This comes just days after the Namoi board gave the green light for its shareholders to accept the $0.67 offer from Olam’s competitor Louis Dreyfus Company.
Since April this year, Olam and LDC have been in a takeover tug-of-war over Namoi Cotton Limited. In May, when Olam’s offer hit $0.70 per share - three cents above LDC’s current bid - the Namoi board began pushing shareholders to accept Olam’s offer.
Following that, the ACCC launched investigations into both takeover offers, which resulted in LDC scoring approvals from the corporate watchdog and the Foreign Investments Review Board (FIRB).
This prompted Namoi to flip its preference from Olam to LDC, as the approvals from both regulators allowed LDC’s offer to become unconditional.
In order to score this approval from the ACCC, LDC undertook a court-enforceable undertaking to divest its shares in ProClass Pty Ltd and to terminate its joint venture with WANT Cotton Pty Ltd.
Meanwhile, both regulators are still undertaking investigations over Olam, despite that business tabling divestments in order to gain approval.
In a supplementary bidders statement shared last month, Olam Agri confirmed it had proposed remedies to address the ACCC’s stated concerns, including offering to divest its interest in a gin in the region of relevance identified by the ACCC, as well as Olam Agri’s interest in ProClass.
“Olam Agri continues to closely and constructively engage with the ACCC in relation to its inquiries and to address the ACCC's stated concerns,” the company wrote last month. “Olam Agri continues to consider there are good reasons why its proposed acquisition of Namoi will not substantially lessen competition.
“As at the date of this document [August 12], the ACCC’s proposed date for its decision in respect of Olam Agri’s proposed acquisition of Namoi has been delayed as a consequence of a request for further information from the ACCC to Olam Agri in relation to the proposed remedy, with the ACCC to announce a proposed decision date in due course.
In a document released today, Olam confirmed it still continues to engage with the ACCC adding that it remains confident of a positive decision.
“While the ACCC approval process has taken longer than anticipated, we remain confident and are committed to working through the process to win approval, including proposing remedies aimed at satisfying the ACCC’s concerns,” Queensland Cotton managing director and Olam Agri Australia lead Ashish Govil said.
“As we have stated before, our proposed acquisition will not substantially lessen competition in the Australian cotton industry. 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.”
Recent documents released by Namoi indicated that the ACCC won’t release its findings until October 31.
An hour after Olam lifted its takeover offer, Namoi's largest shareholder Samuel Terry Asset Management (STAM) - which holds a 25 per cent stake in the Australian ginning business - shared support for the off-market takeover from Olam.
"STAM nottes that prior to the announcement of the revised Olam offer, the Namoi board had recommended Namoi shareholders accept the LDC offer," the asset management firm noted. "STAM confirms that it considers the revised Olam offer to be superior to the LDC offer. STAM encourages the Namoi board to engage with Olam in relation to revised Olam offer."
STAM added that it intends to accept Olam's new offer once it gains regulator approvals and becomes unconditional.
In another new update today, Namoi's independent directors are reconsidering their recommendations in light of the new offer by Olam, and will provide an update to the market in due course.
Amid all this, LDC has bumped up its relevant interest in Namoi shares from 20.24 per cent to 21.30 per cent, while Olam’s interest is approximately 6.02 per cent.