Singapore-based Louis Dreyfus Company acquires 100 per cent of Namoi Cotton shares
Namoi Cotton was already partnered with LDC. (ABC Rural: Alys Marshall)
Australia's oldest and biggest cotton ginning company is set to be transferred into international hands.
Key points:
- The agreement will see LDC acquire the remainder of the shares it does not own
- LDC already owns and operates cotton gins in the NT, Queensland and NSW
- Namoi Cotton shareholders are yet to sign off on the agreement
In a letter to the ASX today, Namoi Cotton announced it had entered into a scheme implementation agreement with the Singapore-based Louis Dreyfus Company (LDC).
The arrangement will see LDC take on the remaining 83 per cent of shares in Namoi Cotton it does not yet own.
The companies were already involved in a joint venture and Namoi Cotton stated that a merger was the preferred option following its strategic review in June 2023.
Namoi Cotton owns and operates 10 cotton gins in New South Wales and Queensland and is in the process of building a long-anticipated new gin in Kununurra, Western Australia.
In the ASX announcement Namoi Cotton chief executive Tim Watson said the scheme would come into effect in mid-2024.
"Until then the Namoi team will be focused on preparing for and delivering – business as usual – for the forthcoming ginning season to our grower customers," he said.
"We will also be progressing with the delivery of our obligations to construct and subsequently operate the new gin at Kununurra for the Kimberley Cotton Company."
The Katherine gin opened last year. (ABC Rural: Matt Brann)
Northern growers look ahead
LDC already has a presence in Australia's north, where it has partnered with Western Australia Northern Territory Cotton to operate the Katherine cotton gin, which opened in the NT in late 2023.
"Namoi's network of cotton gins and the business relationships it has built over the past 62 years are complementary to LDC's activities," LDC's head of cotton Joe Nicosia said in the ASX announcement.
"We strongly believe the move announced today will add value to both entities."
Ord Valley cotton grower Matt Grey, a Kimberley Cotton Company board member, says he and other growers are eagerly anticipating the transport savings and boosts to the northern economy they believe local gins will bring.
"To get the final investment decision earlier this year [for Namoi Cotton to build and operate the Kununurra gin], it's was a huge relief," he said.
"I don't even think, as a board, we've had time to sit down and celebrate yet — but that time will come."
He said the aim was to have the gin ready for the 2025 season.
Tim Watson says Namoi Cotton will continue to operate as normal in the coming months. (Supplied: Namoi Cotton)
Shareholder approval pending
Under the scheme implementation arrangement, Namoi Cotton shareholders will receive at least 50 cents for every share they own in the company.
Mr Watson told the ABC that LDC conducted an "exhaustive" due diligence process before entering into the agreement with Namoi.
"It's safe to say there's probably not a stone left unturned, and I think that's just a big company being cautious about any acquisition that they make," Mr Watson said.
"They were actually really pleasantly surprised with what they found when they looked under the bonnet."
Mr Watson said shareholders would vote on the deal in May, and if they supported it, the acquisition could be completed by mid-year.
"If they vote in favour of the deal – [and] our major share shareholders Samuel Terry Asset Management have already indicated they're supportive, and so have other major shareholders – that then goes back to the judge," he said.
"The judge says everybody's happy and he agrees for the deal to be completed and we anticipate [that] will be around out late May, early June."