Namoi Cotton set for international takeover

Namoi Cotton looks poised to change to international hands after entering into a scheme implementation agreement with the Louis Dreyfus Company.

Louis Dreyfus Company is already a Namoi Cotton shareholder, however, the agreement will see the company acquire the remaining 83 per cent of issued shares it does not own.

The agreement is between Namoi Cotton and LDC’s Singapore-based operations. LDC, however, has its overall headquarters in the Netherlands and operates across the world.

Namoi Cotton operates gins at Boggabri and Merah North. The company also has an office, warehouse and classing service at Wee Waa.

The Moomin gin at Collarenebri and the Wathagar gin at Moree are operated as a joint venture.

Namoi Cotton traces its beginnings to a public meeting held in Wee Waa in 1962. Growers and townspeople met to discuss the concept of a commercial cotton enterprise in the Lower Namoi Valley.

Namoi Cotton Co-operative Limited was incorporated as a rural society under the State Co-operative Act on November 1, 1962.

Paul Kahl was one of the founding members of Namoi Cotton Co-operative Ltd, and he was the first chairman elected to the board.

Under the scheme, Namoi Cotton shareholders will receive a total cash consideration of $0.51 per share, an ASX announcement read. This total cash consideration includes Namoi Cotton paying a dividend of $0.01 per share to shareholders on the dividend record date after April 1, 2024 and prior to scheme implementation.

Each director of Namoi Cotton, with the exception of one abstention, intends to recommend that shareholders vote in favour of the potential transaction.

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

“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,” 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.”

Joe Nicosia, Louis Dreyfus Company’s head of cotton, said Namoi Cotton’s network of cotton gins and the business relationships it has built over the past 62 years are complementary to LDC’s activities.

“We strongly believe the move announced today will add value to both entities,” he said.

“We intend to retain the Namoi Cotton brand name, operate Namoi gins as in the normal course of business and maintain an office in Toowoomba, and look forward to continuing to deliver a competitive service to our grower customers, as we have done over the past 111 years in Australia.”

In last week’s ASX announcement, approved by the independent directors, Namoi Cotton said shareholders do not need to take any action.

“Namoi will continue to keep shareholders and the market informed of developments associated with the scheme in accordance with its continuous disclosure obligations,” the statement read.

The target date for the implementation of the scheme is mid-2024. However, the timetable for the date of the scheme meeting and implementation of the scheme will depend on the process for meeting scheme implementation agreement conditions, including obtaining the required regulatory approvals.