Olam Group’s indirect 64.57 per cent-owned subsidiary Olam Agri on Thursday (May 2) increased its off-market takeover offer to acquire all shares in Namoi Cotton, topping its rival Louis Dreyfus Company Asia’s sweetened bid made a few days before.

Olam Agri raised its offer to A$0.66 cash per share, subject to obtaining an interest in at least 50.1 per cent of Namoi shares, up from its Mar 21 offer of A$0.59 per share, and higher than Louis Dreyfus’ offer of A$0.60 per share, which was made on Monday.

Olam Agri also proposed to increase its offer value to A$0.70 cash per share if it obtains at least 90 per cent of Namoi shares before the end of the offer period. Shareholders who have accepted and received the A$0.66 offer will obtain the benefit of the increased offer price if the 90 per cent threshold is met, noted Olam Agri. If the A$0.70 per share offer is triggered, the company will pay A$144.8 million to secure control of Namoi.

The new bid is almost A$21 million higher than Louis Dreyfus’ offer days earlier. Compared to its rival’s bid, Olam Agri’s A$0.66 per share offer represents a 10 per cent premium, while the increased offer price of A$0.70 implies a 17 per cent premium.

Louis Dreyfus initially launched its takeover bid for Namoi last November with a non-binding offer to acquire the balance shares for A$0.51 each. Following that, Louis Dreyfus, which owns a 17 per cent stake in Namoi, signed a binding agreement in January to acquire the remaining 83 per cent of shares via a scheme of arrangement. Implementation of the scheme was expected in mid-2024.

The tussle for Australia’s largest cotton ginner started when Olam Agri put forward a competing takeover bid two months later. Namoi said then it was considering the bid by Olam in the context of its exclusivity obligations under the agreement with Louis Dreyfus. If applicable, Namoi may be required to pay a break fee to the agricultural commodities trader.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

In response to Olam Agri’s bid, Louis Dreyfus raised its offer for outstanding shares to A$0.60 each on Apr 29. Samuel Terry Asset Management (Stam), as trustee for a group which controls some 23.3 per cent of Namoi shares, had declared then that it intended to accept Louis Dreyfus’ offer. Namoi’s largest shareholder had previously backed Olam’s March proposal.

If the deal with Stam goes through, Louis Dreyfus’ stake in Namoi would rise to 40.3 per cent, or 9.8 percentage points below its minimum acceptance target of 50.1 per cent.

Commenting on the newest bid, Olam co-founder and group chief executive officer Sunny Verghese noted that Olam has operated as a cotton grower, ginner and merchant in Australia since 2007 through its subsidiary Queensland Cotton, giving the group a “deep understanding” of the needs and challenges associated with producing and merchandising high-quality cotton. “This international experience and deep local knowledge, coupled with our credentials as one of the world’s largest private cotton ginners, positions us perfectly to support Namoi and foster its future growth,” said Verghese, adding that Olam’s operations in Brazil and Africa also provide it with global expertise.

Olam’s : VC2 0% shares closed Tuesday down 2.5 per cent or S$0.03 to S$1.18 on a cum dividend basis.