Aussie regulator flags competition concerns on Louis Dreyfus-Namoi Cotton deal (updated)

Namoi Cotton

16/05/2024 01:22

(Updates throughout with details and comments from regulator,
and context on deal)
       May 16 (Reuters) - Australia's competition regulator
raised concerns on Thursday on Louis Dreyfus' proposed A$138.6
million ($92.85 million) acquisition of Namoi Cotton  NAM.AX  as
both companies supply cotton ginning and cotton lint classing in
the same country.
    Dutch commodity merchant Louis Dreyfus Company (LDC), which
already owns around 17% stake in Namoi Cotton, has been engaged
in a bidding war with Singapore-based Olam Agri  IPO-OLAA.SI 
over the past few months to gain full control of the cotton
ginning firm.
    LDC and Namoi supply cotton ginning, cotton lint classing,
logistics and warehousing services, and buy and market cotton
lint and cottonseed in the country, the Australian Competition
and Consumer Commission (ACCC) said in a statement.
    "If this acquisition proceeds, LDC will be involved in
operating the only two cotton gins in the north of Western
Australia and Northern Territory," ACCC Commissioner Stephen
Ridgeway said.
        "We are concerned it would result in LDC being able to
reduce competition between these two cotton gins, which may
result in higher prices or reduced service levels for ginning
services."
    The regulator is also consulting on a draft proposal put
forward by LDC to address the competition concerns it raised by 
undertaking divestments.
        On May 8, Olam Agri revised its previous proposal and
decided to offer Namoi shareholders A$0.70 per share, valuing
Australia's largest cotton producer at A$144.9 million. 
    Shares of Namoi Cotton, which have soared 56% so far this
year, were trading 4% lower at A$0.72, as of 0018 GMT.
    
        
    ($1 = 1.4928 Australian dollars)

 (Reporting by Sneha Kumar; Editing by Sherry Jacob-Phillips)
 ((Sneha.Kumar@thomsonreuters.com;))