Olam Agri, the agribusiness arm of Singapore’s Olam Group, has increased its offer to acquire Australia’s Namoi Cotton NAM.AX, as an international bidding war escalates between the Singapore-based firm and Dutch company Louis Dreyfus Co (LDC).
Olam Agri will now offer Namoi shareholders A$0.70 per share, a three-cent increase from Louis Dreyfus’ previous bid, valuing the Australian firm at A$144.9 million ($95.24 million), the Singapore-based company announced.
The move comes after Olam Agri had initially offered A$0.66 per share for Namoi last week, indicating it would raise the bid to A$0.70 per share if it secures at least 90% support from the target’s shareholders.
However, Rotterdam-based LDC, which already owns a 17% stake in Namoi, refused to accept Olam’s new bid, leading to a deepening of the bidding war between the two companies. LDC and Olam Agri have been competing for control of Namoi since January this year.
Namoi’s shares rose as much as 5.5% to A$0.77 earlier in the day, hitting a near 25-year high, before closing up 1.4%. According to Henry Jennings, a senior market analyst at Marcus Today, the market appears confident that LDC will make another bid for Namoi, and that the Dutch firm may need to increase its offer price up to A$0.80 per share to secure the recommendation.
The off-market deal between the bidders and Namoi requires approval from the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC). This will test the regulators’ appetite for allowing overseas buyers to acquire Australian agricultural assets, as FIRB has taken a cautious approach in the past.
The acquisition would help expand the footprint of both Olam Agri and LDC in Australia. Olam Agri already owns ginning facilities in parts of the country, while LDC previously acquired U.S.-based Dunavant Enterprises’ cotton operations in Australia.
The escalating bidding war for Namoi Cotton highlights the growing interest and competition in the Australian agricultural sector, particularly among global agribusiness players.