Namoi shares rise after LDC takeover bid gets ACCC approval
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More news: Shares in takeover target Namoi Cotton are up 7.4% to 73 cents in early trading after the competition regulator gave a conditional nod to the proposed bid by Louis Dreyfus Company (LDC) after the French agri-commodities giant agreed to divest some of its other holdings in Australia.
The ACCC is also due to rule on a rival bid for Namoi by Singapore’s Olam Agri Holdings later this month, after raising preliminary competition concerns.
What they said: ACCC deputy chair Mick Keogh said: "Without the divestiture, there was a risk that ProClass and ACS would not compete with each other effectively, given the LDC Group’s respective part ownership and full ownership of these businesses.
“This could have resulted in increased cotton classing prices or a reduction in the quality of classing services in Australia.”
In response to the ACCC's decision, Olam group CEO Sunny Verghese said: "Olam Agri continues to engage constructively with the ACCC regarding our proposed acquisition of Namoi and we remain confident of a positive outcome.
"We believe our proposed acquisition will not substantially lessen competition in the Australian cotton industry, however, to address potential concerns, we have proposed some potential divestments of assets in Australia.
“We look forward to the ACCC’s decision and we urge shareholders to wait until the final decision is published."
ACCC clears way for LDC’s bid for Namoi Cotton
The news: The competition regulator has waved through a takeover bid by Louis Dreyfus Company (LDC) after the French agri commodities giant agreed to divest some of its other holdings in Australia.
The numbers: LDC has provided a court-enforceable undertaking to the Australian Competition and Consumer Commission (ACCC) that it will divest a 20% holding in cotton lint classing services supplier ProClass and end a joint venture with WANT Cotton to operate a cotton gin in the Northern Territory.
The context: The ACCC was concerned LDC’s proposed acquisition of Namoi Cotton, Australia’s top cotton ginner, would substantially lessen competition in cotton ginning services in the NT and north WA but said the agreed measures address these concerns.
The competition regulator is also due to rule on a rival bid for Namoi by Singapore’s Olam Agri Holdings later this month, after raising preliminary competition concerns.
LDC is Namoi’s second-biggest shareholder with an 18% stake and also operates a joint venture with the Australian firm. However, Namoi’s independent directors have backed Olam’s 70 cents a share over LDC’s 67 cents/share offer. Namoi's largest shareholder Samuel Terry Asset Management, which holds a 24.2% interest, has also previously backed Olam’s offer.
The source: ACCC media release
