February 1, 2024

By Lynda Kiernan-Stone, Global AgInvesting Media

Louis Dreyfus Company (LDC) has agreed to acquire the remaining 83 percent it already doesn’t own in Australia’s Namoi Cotton by way of a Scheme of Agreement that is expected to be implemented in mid-2024. 

Namoi is a pioneer in the Australian cotton industry. In business since 1962, the company is the country’s leading cotton supplier and dominant presence in the supply chain. What began on October 30, 1962 at a public meeting between a group of growers and townspeople in Wee Waa to discuss the formation of a growers co-operative has grown into a company with 10 cotton gins in New South Wales and Southern Queensland with a capacity to gin 1.6 million bales per year. It also includes three warehouse sites with a combined static capacity for half a million bales, and a history of 29 million cotton bales ginned. 

Over the years, LDC and Namoi Cotton have had a working relationship. LDC currently holds a 17 percent stake in the company, and together they operate two joint ventures: Namoi Cotton Alliance (NCA) and Namoi Cotton Marketing Alliance (NCMA). 

“The proposed transaction reflects LDC’s long-term commitment to growing with Australia, promoting sustainable agricultural practices, supporting farming communities and contributing to local economic growth,” said Joe Nicosia, head of cotton, LDC.

“The addition of Namoi Cotton into our Australian cotton operations also aligns with LDC’s global strategy to reinforce its leadership in core merchandising activities – in this case by strengthening our service to local cotton farmers, through an expanded ginning and logistics footprint.”

Under the terms of the agreement, Namoi shareholders will receive a total cash consideration of $0.51 per share – this includes an $0.01 per share dividend to Namoi shareholders on the dividend record date after April 1, 2024, and prior to the Scheme implementation. This represents a premium of 44 percent to the close share price and a premium of 37 percent to the three-month VWAP prior to the announcement of the non-binding indicative offer (NBIO) on November 28, 2023. 

‘Combining Namoi’s ginning business with LDC is designed to create a strengthened and sustainable business for our grower customers and staff and providing Namoi shareholders the opportunity to realize value for their shares at an attractive premium to the share price prior to the announcement of LDC’s indicative proposal,” said Tim Watson, executive chairman, Namoi.

“The implementation of the Scheme is expected 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,” continued Watson. “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.”

LDC head of cotton, Joe Nicosia, noted that LDC intends to retain the Namoi Cotton brand name and operate the gins in alignment with the company’s normal course of business, while also maintaining an office in Toowoomba.

“Namoi’s network of cotton gins and the business relationships it has built over the past 62 years are complementary to LDC’s activities, and we strongly believe the move announced today will add value to both entities,” said Nicosia. 

“As a longstanding partner of LDC for the past decade, we look forward to working closer with a leading global agribusiness and cotton merchant,” added Namoi’s Tim Watson. “With our combined capability, we will further develop our excellence in cotton processing and marketing, delivering additional value to Australian cotton growers.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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