By Peter Roberts
Another day another takeover of an Australian manufacturer, this time of ginning company Namoi Cotton.
The directors of the company, which operates 10 cotton gins on the east coast and in Northern Western Australia, have said they intend to recommended shareholders accept a takeover offer from Louis Dreyfus Company Asia Pte Ltd (LDC).
Louis Dreyfus is involved in agricultural processing, has a 17 percent shareholding in Namoi Cotton, and is a joint venture partner in the Namoi Cotton Alliance and Namoi Cotton Marketing.
In a non-binding indicative offer for Namoi, the company is offering to acquire 100 percent of the business for 51 cents per share, a premium of 44 percent on the last closing price.
While cotton ginning is a basic processing operation, Namoi’s gins represents one of the very few downstream processing activities occurring in Australia’s cotton sector and under Australian control.
Here, again, Australia is a supplier of the moist basic of commodities, with the value-adding occurring overseas – a familiar story of the de-industrialisation of Australia.
Namoi did say: “LDC values the capability and relationships built by Namoi over the past 60 years and intends to operate all Namoi’s gins in the normal course, maintain an office in Toowoomba and retain the Namoi Cotton brand name.”
The next step in the takeover process is for LDC to undertake due diligence – however with the directors already raising the white flag, we can all but farewell Australian control over even the most basic of cotton processing.
Picture: Namoi Cotton