The bidding war between Louis Dreyfus Co. (LDC) and Olam Agri Holdings for Australian producer Namoi Cotton has intensified, with LDC announcing its decision not to support Olam Agri's offer. LDC, which holds a 17% stake in Namoi Cotton, stated in a regulatory filing that it would not accept Olam Agri's recent offer, marking a significant development in the ongoing competition between the two major agricultural commodities traders.
Olam Agri's latest offer, made on May 2, valued Namoi Cotton at A$135.5 million, contingent upon securing support from over half of Namoi Cotton's shareholders. Olam Agri indicated a willingness to increase this offer if it gains backing from at least 90% of shareholders. Both LDC and Olam Agri have been escalating their bids over the past few months, reflecting the strategic importance they place on acquiring Namoi Cotton and expanding their presence in Australia's cotton industry, ranked sixth globally.
The Australian cotton sector, being the world's sixth-largest, has attracted substantial interest from both LDC and Olam Agri. Olam Agri already has a presence in Australia through Queensland Cotton and several ginning facilities in New South Wales and Queensland. Similarly, LDC operates a cotton business with three processing plants across the country. Namoi Cotton's shares have responded positively to the bidding activity, with a notable surge on May 2 and continued trading at higher levels, indicating market optimism regarding the potential outcomes of this bidding war.