Australia regulator raises concerns over Olam’s A$145 million bid for Namoi Cotton

AUSTRALIA’S competition regulator said on Thursday (Jun 20) the proposed acquisition of Namoi Cotton by Singapore’s Olam Agri for A$145 million (S$131 million) raised competition concerns in the supply of cotton ginning services.

The affiliate of Singapore’s Olam Group and Dutch commodity merchant Louis Dreyfus Company have been engaged in an international bidding war to take control of Namoi, which would help them expand their footprint in Australia.

Olam, through its unit, Queensland Cotton, and Namoi both supply cotton ginning, cotton lint classing, logistics and warehousing services in Australia, with both the firms involved in the acquisition and marketing of cotton lint and cottonseed.

“The proposed acquisition would reduce the number of competing ginning suppliers in the Lower Namoi Valley from three to two, with Olam operating four of the five cotton gins if the acquisition proceeds,” Australian Competition and Consumer Commission Commissioner Stephen Ridgeway said.

If the acquisition goes through, only one alternative cotton gin in the Lower Namoi Valley region operated by Australian Food and Fibre would exist, Ridgeway added.

The possibility of reduced competition could result in higher prices for cotton growers in the region, the regulator said, while also flagging concerns around the impact on the supply of cotton lint classing services in Australia. REUTERS