Australia opposes ADM’s A$3.4bn Graincorp takeover deal

The Australian Government has rejected US-based Archer Daniels Midland’s (ADM) proposed takeover of grain handler GrainCorp in a deal which was valued at A$3.4bn ($3.1bn).

The proposed deal had attracted concern from stakeholders and the broader community that it would not be in the national interest.

Treasurer Joe Hockey said that he made the decision after the Foreign Investment Review Board (FIRB) was split on whether to approve the deal.

"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.

Hockey added that the proposed acquisition of GrainCorp by ADM is one of the most complex cases to come before the FIRB, and one of the most significant proposed acquisitions of an agricultural business in Australia’s history.

ADM already owns a 19.85% stake in GrainCorp, and Hockey has stated that he is open to proposals from ADM that would increase its shareholding up to 24.9%.

ADM chairman and CEO Patricia Woertz said, "We are disappointed by this 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."

In October 2012, ADM made an offer to pay A$11.75 per share to GrainCorp; however, the offer was rejected as too low.

In December, the US firm raised its offer by 3.8% to A$12.20 per share, but GrainCorp noted that the offer did not represent its portfolio of assets; however, the bid was accepted in April this year.

As per the deal, ADM agreed to pay GrainCorp shareholders a one-time A$1 ($1.02) per share special dividends.

If finalised, the acquisition of GrainCorp would have been the largest purchase for ADM following its purchase of W.R. Grace & Co.’s cocoa business for $470m in 1996.

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Image: Hockey described the proposed acquisition of GrainCorp by ADM as one of the most complex cases to have come before the FIRB. Photo courtesy of rakratchada torsap at FreeDigitalPhotos.net.