Louis Dreyfus Singapore acquires 100% of Namoi Cotton shares

In a letter to the Australian Securities Exchange (ASX) on January 19, 2024, Namoi Cotton announced the signing of an agreement with Louis Dreyfus Singapore (LDC). According to the agreement, LDC will take over the remaining 83% of Namoi Cotton shares they do not currently own.

The parties have entered into a joint venture, and Namoi Cotton declared that the merger was a priority choice after reviewing the business strategy in June 2023.

Namoi Cotton owns and operates 10 cotton manufacturing plants in New South Wales, Queensland, and is in the process of constructing a new plant in Kununurra, Western Australia.

In the mentioned announcement, Namoi Cotton’s CEO, Tim Watson, stated that the plan would be effective in mid-2024, and until then, Namoi will focus on preparing and delivering the upcoming season’s harvest to customers as usual.

LDC is already present in northern Australia, where they collaborate with Western Australia Northern Territory Cotton to operate the Katherine raw cotton processing plant by late 2023.

Joe Nicosia, head of LDC’s cotton division, said in the ASX announcement: “Namoi’s network of factories and the business relationships the company has built over 62 years are a significant addition to LDC’s operations,” and he believes that today’s announced move will add value to both entities.

Matt Grey, a cotton grower in Ord Valley and a board member of Kimberley Cotton Company, mentioned that he and other cotton growers are eagerly anticipating cost savings in transportation and stimulating the northern economy that they believe the new plant will bring. He said, “To make the final investment decision earlier this year (for Namoi Cotton to build and operate the new plant) is a step in the right direction.”

According to the agreement, Namoi Cotton shareholders will receive at least 50 cents per share they own. Tim Watson also told ABC that LDC conducted a “comprehensive” due diligence process before finalizing the agreement with Namoi. He said, “It can be safely said that there is no doubt, that’s how a large company operates in any acquisition deal.” He also added, “Our major shareholder, Samuel Terry Asset Management, has expressed their support, and other major shareholders as well. All shareholders will vote on this deal at the end of May, beginning of June, and if the results are favorable, they will be pleasantly surprised with what they receive.”

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