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VOL. 125 | NO. 78 | Thursday, April 22, 2010

Allenberg Cotton Buys Dunavant HQ

By Eric Smith

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The merger between two kings of Memphis cotton has cleared a major hurdle with Allenberg Cotton Co.’s purchase of the Dunavant Enterprises Inc. headquarters at 3797 New Getwell Road.

Allenberg’s parent company, Louis Dreyfus Corp., paid $1 million for the 63,662-square-foot facility – less than half its appraised value of $2.3 million.

Operating in the transaction as Louis Dreyfus Commodities Asset Holdings LLC, the company formally bought Dunavant’s warehouse April 9. The deed wasn’t recorded by the Shelby County Register of Deeds until Wednesday morning.

H.J. Weathersby signed the warranty deed as executive vice president of Dunavant.

When reached by phone Wednesday morning, he declined comment except to say, “It’s an ongoing process.”

Weathersby added that he wasn’t sure when the company would be able to comment further.

Messages left with Allenberg CEO Joseph Nicosia weren’t returned by press time.

Still, the transaction signals progress in Allenberg’s nearly yearlong bid to buy Dunavant now that the company has taken possession of its competitor’s main building.

Built in 1972, the Class B warehouse sits on 5.48 acres on the west side of New Getwell in the Airport Office Park subdivision. The Shelby County Assessor of Property appraised the building at $2.3 million in 2009 as well as in its 2010 valuation.

Plans for the union were made public last summer, creating huge news in an industry that has experienced tumult because of a shrinking market and volatility in futures. The merger has run into other snags regarding anti-trust issues.

The two cotton giants have roots on Memphis’ famed Front Street – aka Cotton Row – the epicenter of cotton trading and brokerage during the industry’s heyday here.

Allenberg, whose headquarters are in Cordova, was founded in 1921 and first operated out of two rooms on Front Street.

Nicosia told The Daily News last summer that the two companies were “deep into negotiations,” although he declined comment on the reason for the proposed merger.

“We’re both optimistic and have a positive outlook on the potential outcome,” he said. “And we’re going to continue moving down that road, going through our due diligence process and talking to employees.”

The namesake of Dunavant Enterprises, William Buchanan Dunavant, started trading cotton on Front in 1929, just a few years after Allenberg was founded.

Dunavant CEO William B. Dunavant III told The Daily News last August that talks were still in progress.

“Dunavant Enterprises and (Allenberg) are in discussion about a potential transaction to merge their global cotton operations,” Dunavant said at the time. “Dunavant and Dreyfus are obviously very active participants in the world cotton market, and we believe this merger will be a very positive event for both companies as well as the industry.

"We will be providing details of the transaction as the negotiations continue, and the details of the transaction have not yet been finalized.”

PROPERTY SALES 120 120 16,027
MORTGAGES 64 64 9,986
BUILDING PERMITS 203 206 38,142
BANKRUPTCIES 21 28 7,500