ACCC complicates Louis Dreyfus’ takeover bid for Namoi Cotton

The takeover plans of Singapore’s Louis Dreyfus Company (LDC) for Australia’s largest cotton processor Namoi Cotton (ASX: NAM) have hit a roadblock as the competition regulator, the Australian Competition and Consumer Commission (ACCC), raises concerns about the potential acquisition.

The ACCC has expressed preliminary concerns about LDC’s takeover plans, particularly in relation to the impact on producers seeking cotton ginning services in the north of Western Australia and Northern Territory. Additionally, the regulator is looking into whether the proposed takeover could reduce competition in the marketing of cotton lint and seed.

While rival Singaporean agri-business Olam Agri Holdings currently holds the upper hand with a $144.8 million offer for Namoi Cotton, the ACCC’s concerns could complicate matters if LDC emerges victorious in the bidding war. LDC has already discussed the potential disposal of assets to address the competition regulator’s concerns.

Both LDC and Namoi are key players in the Australian cotton industry, providing ginning, classing, logistics, and warehousing services, as well as buying and marketing cotton lint and seed. The ACCC’s concerns are centered around the potential impact on competition in Western Australia and Northern Territory, where LDC would have significant control over cotton processing facilities.

As the bidding war between LDC and Olam Agri continues, shareholders are eagerly watching the developments, with Namoi Cotton shares reaching a high of 77c last week. The outcome of the ACCC’s investigation and the final decision on the takeover bid will have far-reaching implications for the Australian cotton industry.