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LONDON/NEW YORK, April 26 (Reuters) - Soft commodity giant
Armajaro is no longer in talks to buy Plexus Cotton Ltd, a
medium-sized cotton merchant, throwing into doubt the soft
commodity trader's plans to expand its footprint in the volatile
The privately-held British companies were close to a deal in
November last year, but were unable to agree on terms, the
companies said in a joint statement on Friday. Further details
were not known.
"Discussions have been discontinued by mutual agreement due
to a failure to agree terms," the statement said.
A deal would have given Armajaro a British second-tier
merchant in the small but volatile cotton industry, handling
about 800,000 bales a year, according to trader estimates.
It also has farms and ginneries in Africa and a sales agency
in China, the world's largest cotton producer and consumer. It
reported $500 million in turnover in 2011, according to the most
Armajaro Trading had courted Liverpool-based Plexus for some
time as part of a strategy to diversify its agricultural
commodity portfolio. It trades cocoa, coffee and sugar.
The parent company, Armajaro Holdings Ltd, which was
co-founded by Anthony Ward and Richard Gower, has an asset
management unit as well as subsidiaries that trade financial
instruments and vintage wines.
The acquisition would also have been one of the industry's
first major deals since 2009 when Allenberg Cotton, a division
of trading giant and the world's largest cotton merchant, Louis
Dreyfus Corp, bought Dunavant Enterprises.
The long-time cotton firm was left reeling following 2008's
Armajaro's talks with Plexus were in very different
circumstances: Plexus chairman and owner Nick Earlam, who
founded the company in 1990, was not under duress to sell.
Otherwise, there has been little major consolidation in the
industry. In January, Louis Dreyfus announced plans to buy a
13-percent stake in Namoi Cotton Co-operative Ltd to expand its
share of the lucrative Australian market.
The negotiations have ended as cotton's longest bull run in
two years fuelled by speculative buying has faltered.
Spot prices were down 7 percent this month and off
more than 12 percent from a one-year high of almost 94 cents per
lb touched mid-March as hedge funds and other speculative
investors have booked profits.
Even so, cotton's turnaround after two years of double-digit
percentage losses on lower demand and a big surplus has
surprised many traders.
Year-to-date, prices are still up 8 percent and cotton is
the third-best performing asset in the Thomson Reuters-Jefferies
CRB index, a commodities bellwether that tracks 19
mostly U.S.-traded markets.
(Reporting by Sarah McFarlane in London and Chris Prentice in
New York; Editing by Jane Baird and Marguerita Choy)