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An international bidding war has escalated for Australia's Namoi Cotton (ASX: NAM), with Singapore's Olam Agri Holdings (IPO-OLAA.SI) launching a takeover offer worth AU$136.6 million ($89.13 million), surpassing a bid by a Dutch-led consortium earlier this week.
Olam has proposed to offer AU$0.66 per share for the Australian cotton producer, contingent upon acquiring at least 50.1% of Namoi. If Olam's ownership stake reaches 90%, the offer price will increase to AU$0.70 per share, as per a stock exchange filing on Thursday.
However, the off-market deal is subject to approval from the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC). FIRB has maintained a cautious stance on foreign entities acquiring Australian agricultural assets.
Namoi Cotton stands as the largest cotton producer in Australia, while Olam already holds ownership of rival company Queensland Cotton. Following Olam's announcement, Namoi's shares surged by 12.5% to AU$0.72 each, marking their highest level since March 7, 2007, and outpacing the broader market index XJO, which saw a 0.5% increase.
Olam's offer surpasses the AU$0.60 all-cash bid put forward by Netherlands-based global commodity merchant Louis Dreyfus Company (LDC) earlier in the week. LDC aimed to acquire the remaining 83% of issued shares in Namoi that it does not already control. Olam and LDC have engaged in a bidding war for control of Namoi since earlier this year.
In response to Olam's proposal, Namoi disclosed that its largest shareholder, Samuel Terry Asset Management Pty (STAM), has pledged support for Olam's bid. STAM had also endorsed LDC's offer on Monday.
Namoi further stated that its independent directors would evaluate Olam's takeover offer and provide a recommendation to Namoi shareholders in due course. Olam Agri emphasized that its off-market bid provides simplicity and certainty for Namoi shareholders, differing from its previous non-binding indicative offers earlier this year. Olam Agri operates as a unit of agri-business firm Olam Group (OLAG.SI).
