Crop trader Olam Agri Holdings Ltd has raised its takeover offer for Namoi Cotton Ltd, just two days after independent directors at the Australian producer recommended a rival bid from Louis Dreyfus Co BV.

Olam’s increased all-cash offer values Namoi at A$154 million (US$104 million, or RM447.31 million), which is 12% more than the Louis Dreyfus proposal. Namoi said its directors are considering their recommendations on both takeover bids, and that its biggest shareholder plans to accept the Olam offer in the absence of a higher proposal, according to exchange filings on Friday.

The rival crop traders have been jostling to buy Namoi since January, to gain a bigger foothold in Australia, the world’s sixth-largest cotton producer. The Louis Dreyfus bid is marginally lower and due to close on Friday, but the company has built up a 21% stake in Namoi, presenting a significant hurdle for Olam.

Louis Dreyfus was not immediately available for comment, while calls and an email to Namoi went unanswered.

Namoi offers supply diversity and processing heft close to manufacturing hubs such as Vietnam and Bangladesh, where cotton can be used to make clothes and homewares. The Australian company operates about a quarter of the nation’s processing plants, known as gins.

The takeover offers have raised some competition issues, but the Australian Competition and Consumer Commission (ACCC) said last month that it wouldn’t oppose the Louis Dreyfus bid after the crop trader agreed to measures that would allay some concerns. The ACCC continues to assess the Olam proposal.

Namoi recommended the proposal from Rotterdam-based Louis Dreyfus earlier this week, saying the offer price from Singapore-based Olam was insufficient, given the greater uncertainty.

Olam - which raised its bid for Namoi to 75 Australian cents per share from 70 cents - remains confident that it will receive the ACCC’s approval, Ashish Govil, the head of the trader’s Australian branch, said in an emailed statement on Friday. Concentration of gin ownership is less of an issue due to the competitive nature of acquiring cotton to process, he added.

Namoi shares rose as much as 5.2% in Sydney - the biggest intraday gain since Aug 1 - before easing slightly to 70 Australian cents.

  - Bloomberg