Louis Dreyfus Co BV has secured control of Australia's largest cotton processor, Namoi Cotton Ltd, after an eight-month battle with Olam Agri Holdings Ltd. This victory gives Dreyfus a stronger foothold in the Pan-Pacific cotton market, enhancing access to high-quality fibre from Australia, a region pivotal for manufacturers in Bangladesh and Vietnam.
The takeover, valued at A$160 million ($107 million), was a hard-fought contest with multiple bids, forcing Dreyfus to increase its final offer by 51%. While Olam pushed the price higher, Dreyfus’s existing 17% stake in Namoi gave it a strategic advantage throughout the process.
Namoi, which operates about a quarter of Australia's cotton processing plants, began the takeover process to safeguard its future after being severely affected by drought and operational challenges. Namoi’s chairman, Tim Watson, noted that the company’s balance sheet was not strong enough to withstand major growth opportunities on its own.
With this acquisition, Dreyfus will control 13 processing plants in Australia, surpassing Olam Agri's nine facilities. The move is seen as part of a broader industry trend of consolidation amid declining demand for natural fibres like cotton, as synthetic options such as polyester become more prevalent.
The Australian Competition and Consumer Commission closely scrutinized the deal, but Dreyfus managed to alleviate concerns by agreeing to sell a stake in a cotton lint classing service and terminate a joint venture.
Now on the brink of completing the acquisition, Dreyfus is positioned to benefit from the premium pricing that Australian cotton can command, reinforcing its supply chain resilience across the northern and southern hemispheres.
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