Friday, 26 April, 2013

Foreign takeover of our largest listed Aussie Agribusiness company

GrainCorp has today announced it has entered into a conditional agreement with Archer Daniels Midland Company (ADM) for a takeover offer of Australian bulk grain handler, GrainCorp.

The Victorian Farmers Federation (VFF) says that US-based agrifood giant Archer Daniels Midland’s (ADM’s) takeover agreement with Graincorp raises a number of issues for Australian grains producers and exporters.

Under today’s agreement GrainCorp shareholders will receive, if successfully completed, $13.20 per share comprising a cash payment of $12.20 per share and dividends totalling $1.00 per share.

“Assuming the ADM agreement passes regulatory approval then foreign companies will now own and control all major East Coast bulk handlers – Graincorp by ADM, AWB Grainflow by US multi-national Cargill, and Viterra now owned by Swiss based Glencore”, VFF’s Grains President Brett Hosking said.

“While this consolidation and acquisition is not unexpected, it is disappointing to see Australia’s largest listed agribusiness acquired by foreign interests.

“In essence foreign multi-national grain companies will now own and control the major grain port infrastructure in Eastern Australia as well as control access to grains stocks information.

“VFF Grain’s position has been that in a deregulated market competition is essential to ensuring an effective and efficient supply chain to benefit producers, consumers and exporters alike.

“That’s why we need a compulsory code of conduct to ensure all exporters have open access to ports and transparent information on grain stocks. This is crucial to ensuring all exporters can compete on a level playing field.”

The VFF will be focussing on how ADM proposes to operate Graincorp as the major bulk-handler on the East Coast, as it has the potential to significantly impact its rival’s access to ports and handling facilities and stocks information.

“The VFF Grains industry would be concerned if ADM attempts to introduce a ‘closed-loop’ system in Australia which is a feature of American grain exporting, where exporters predominantly buy into their own bulk handling system and export from it exclusive of other exporters,” Mr Hosking said.

Tom Whitty

Public Affairs Advisor

VFF