AUS: Australia blocks ADM takeover of GrainCorp

By Dean Best | 29 November 2013

Australia has blocked overseas takeover of countrys largest grain merchant

Australia has blocked overseas takeover of country's largest grain merchant

Australia has blocked Archer Daniels Midland's bid to buy local agribusiness GrainCorp.

In a long-awaited ruling, Joe Hockey, Australia's Federal Treasurer, said today (29 November) the proposed A$3.4bn (US$3.09bn) takeover of the country's largest grain handler was "not in the national interest".

Hockey indicated the deal could hit competition in Australia's grain sector, where rival companies are looking to grow since deregulation in 2008 led to the end of the wheat exports single desk.

"Many industry participants, particularly growers in eastern Australia, have expressed concern that the proposed acquisition could reduce competition and impede growers’ ability to access the grain storage, logistics and distribution network.  Given that the transition towards more robust competition continues and a more competitive network is still emerging, I consider that now is not the right time for a 100% foreign acquisition of this key Australian business," Hockey said.

ADM's pursuit of GrainCorp had met with opposition in some political and farming circles. This week, ADM made pledges on areas including investment in infrastructure, price caps on grain handling charges and "open access" for port services.

Hockey said ADM had "foreshadowed" the plans to him "some time ago" and his decision was made with knowledge of the commitments.

ADM chairman and CEO Patricia Woertz said she was "disappointed" by the decision. "We are confident that our acquisition of GrainCorp would have created value for shareholders of ADM and GrainCorp, as well as grain growers and the Australian economy," she said.

The US agri-giant owns a 19.9% stake in GrainCorp. Hockey said he was "inclined" to approve any attempt by ADM to take its shareholding up to 24.9% "to encourage ADM to demonstrate its commitment to the Australian grains industry". He added: "This would also provide a platform for ADM to build stakeholder support for potentially greater participation in the Australian industry as it develops."

Woertz said ADM would look to "maximise returns on our investment and create value for both companies".

Sectors: Commodities & ingredients, Mergers & acquisitions

Companies: Archer Daniels Midland

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