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GNC Graincorp Limited

8.39
0.04 (0.48%)
23 May 2024 - Closed
Delayed by 20 minutes
Share Name Share Symbol Market Type
Graincorp Limited ASX:GNC Australian Stock Exchange Ordinary Share
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.04 0.48% 8.39 8.39 8.46 8.50 8.30 8.31 1,067,383 07:40:34

Australia Blocks ADM's A$3 Billion Bid to Buy GrainCorp -- Update

28/11/2013 10:29pm

Dow Jones News


Graincorp (ASX:GNC)
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   By Rob Taylor 
 

SYDNEY--Australia blocked a 3.0 billion Australian dollar (US$2.7 billion) bid by U.S. agribusiness company Archer Daniels Midland Co. (ADM) to buy grain handler GrainCorp. Ltd. (GNC.AU) on grounds that a takeover would go against the national interest.

The move follows lobbying by farmers and some conservative politicians against the deal, which would have seen 60% of wheat shipments from Australia controlled by three companies--ADM, Glencore Xstrata PLC (GLEN.LN) and Cargill Inc. It would also have put almost all of the country's export infrastructure under foreign ownership.

However, a decision to veto the deal also raises questions about the commitment of the new center-right Liberal-National government to welcoming foreign investment, seen as critical to supporting a slowing economy as a decadelong resources boom ends.

"The proposed acquisition of GrainCorp by ADM has been one of the most complex cases to come before Firb, and it is one of the most significant proposed acquisitions of an agricultural business in Australia's history," Treasurer Joe Hockey said.

Mr. Hockey said he took the decision after the Foreign Investment Review Board, or Firb, was split on whether to allow the deal to proceed. The watchdog had until Dec. 17 to decide whether to approve the deal, impose conditions on it, or reject it altogether.

Earlier this week, ADM made a late move to sway the decision in its favor, promising to spend A$200 million more on rail infrastructure. It pledged to cap grain-handling and storage charges at the rate of inflation for three years in an attempt to address growers' concerns that they could be hit by higher grain-handling fees.

ADM also promised an "open access" system for port services as well as a grower and community consultation board in the three eastern seaboard states where GrainCorp has a near-monopoly on the industry. It said third-party grain marketers would be able to access grain-storage and receiving sites.

"We are disappointed by this decision," said Patricia Woertz, ADM's chairman and chief executive, in a statement. "Throughout this process, we worked constructively to create an arrangement that would be in Australia's best interests and made substantial commitments to address issues that were important to stakeholders."

However, Mr. Hockey said he believed that the takeover would have been against Australia's national interest at a time when the grains industry was undergoing a significant transition from a single wheat export market desk in 2008. GrainCorp owns 280 rural storage silos and seven of the 10 grain port terminals on the east coast.

This would have seen ADM take over a company that held a commanding market position, even though the Australian Competition and Consumer Commission had already given the deal the green light.

As a result, no conditions offered by ADM would have been acceptable to the government that could have allowed the deal to proceed, Mr. Hockey said.

The ADM-GrainCorp deal is only the third takeover to be rejected by Australia in little more than a decade, the last coming in 2011 when Singapore Exchange Ltd. (S68.SG) was prevented from buying main stock market operator ASX Ltd. (ASX.AU) for A$8.4 billion.

Prior to that, Royal Dutch Shell PLC's (RDSB) attempt to buy Woodside Petroleum Ltd. (WPL.AU) in 2011 was also rejected.

-Write to Rob Taylor at rob.taylor@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


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