Olam bags Qld Cotton as French rival gives up fight

Olam bags Qld Cotton as French rival gives up fight
Geoffrey Newman
June 22, 2007

SINGAPORE-based food trader Olam International has denied any deal with the rival bidder for Queensland Cotton, to sell off parts of the business in exchange for it dropping out of the takeover race.
Olam yesterday announced that French commodities trader Louis Dreyfus had agreed to accept its increased offer of $5.90 a share for Queensland Cotton Holdings (QCH), ending a takeover battle between the two that began in March.

Louis Dreyfus, the world's largest cotton trader, agreed to sell its 20 per cent stake in QCH, Australia's largest producer, to Olam.

Olam denied it had offered any inducements, despite revealing that Louis Dreyfus had expressed an interest in QCH's warehouse in Eloy, Arizona, and that Olam was considering selling any assets outside Australia that were "non-core".

"No agreement, undertaking or understanding exists with anyone to sell any assets," the three parties said in a joint statement. "Louis Dreyfus' stated intention to accept the Olam takeover offer is not conditional on any sale or any other matter."

Olam also said it was considering partnering in non-cotton products in other countries.

Olam lifted its offer for QCH to $5.90 per share from its prior offer of $5.65, valuing QCH at about $166.45 million.

Louis Dreyfus's last offer was $5.85 a share.

With the Louis Dreyfus stake now in hand, Olam has an interest of 28.5 per cent in QCH - becoming the largest single shareholder.

The latest Olam bid was unanimously recommended by the QCH board. All QCH shareholders who had already accepted Olam's prior offer of $5.65 will receive an extra 25c a share. Olam has a presence in 52 countries and its businesses include cotton, dairy, cocoa, coffee, cashews, sesame, rice and teak wood.

It has said it is also interested in using QCH, which also has a substantial US presence, to expand into other Australian agricultural sectors such as wheat, dairy and nuts.

"We were surprised that Louis Dreyfus has decided to throw in the towel," said Tom Elliott, whose Melbourne-based hedge fund MM&E Capital has built an 8 per cent stake in QCH since Olam's first bid, and hasn't decided to sell.

"They must have other plans with the money they will make from selling their stake. Other stocks in the agriculture sector could come under attention."

QCH shares closed 2c lower at $5.88.

Additional reporting: AAP, Bloomberg