Not long after throwing a spanner in the works of Chemist Warehouses’s reverse listing, the regulator has now taken issue with Namoi Cotton’s (ASX:NAM) proposed takeover.
Singapore-listed Olam had made a bid to buy ASX-listed Namoi Cotton, but the regulator made clear on Thursday it has concerns about the deal.
And it has a lot of concerns.
The first issue is that this isn’t Olam’s entrance into the Australian market – it’s already here, as Queensland Cotton (QC).
The company has a presence across the entire east domestic cotton supply chain, from harvesting to marketing.
The ACCC on Thursday revealed it is concerned that:
- The acquisition would probably lessen competition broadly
- The number of competing processing facilities would fall to 2
- Olam would have interests in two cotton grading companies that handle 80% of all cotton in Australia
- That Olam would be afforded too much ability to manipulate the cotton market to its own benefit
- That it could do that same to competitors’ detriment with other growers paid less for their cotton
- That the marketing and warehousing of cotton in Australia would similarly be susceptible to manipulation by Olam, if it so desired
- Olam could hypothetically change export prices at a whim
Talk about a small list of concerns.
Members of the public have until 4 July to respond to the regulator’s statement of issues.
NAM last traded at 70cps.
