ADM's Bid for GrainCorp Shuttered

Australian Federal Treasurer denies acquisition proposal

Published on: Dec 5, 2013

Even after pledging an additional $200 million in investments to Australian infrastructure and a host of other commitments related to the acquisition of Australia's GrainCorp, the Australian Federal Treasurer last Thursday prohibited the deal on concerns of national interest.

The Decatur, Ill.- based grain processor first made a bid to acquire GrainCorp in October, 2012, when it purchased additional shares in the company, bringing total interest to 14.9%. ADM later said it would make a bid to purchase the entire company, though at least two offers were rejected before the end of 2012.

Australian Federal Treasurer denies ADMs acquisition proposal for GrainCorp (ADM photo)
Australian Federal Treasurer denies ADM's acquisition proposal for GrainCorp (ADM photo)

GrainCorp represents Australia's largest listed agribusiness, which handles approximately 75% of eastern Australia's annual grain production.

Following takeover rejections, ADM made an offer to purchase GrainCorp for A$12.20 per share in May. The deal was subsequently approved by the European Commission, the Japan Fair Trade Commission, South Africa’s Competition Commission, Canada’s Competition Bureau, Australian Competition and Consumer Commission and the United States Federal Trade Commission.

ADM also pledged a host of benefits to the Australian grain industry as a condition of purchasing GrainCorp, including: an additional $200 million investment to strengthen Australian agricultural infrastructure; price caps on grain handling charges at silos and ports; commitment to grain infrastructure access for growers and third parties; commitment to "open access" regime for port services; a grower and community advisory board; and support for expanded grain stocks information arrangements.

Despite the additional offerings, the Australian Treasury blocked the deal.

"We are disappointed by this decision," commented ADM Chairman and CEO Patricia Woertz in a company statement. "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.

"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," she said.

Woertz confirmed there were no conditions or undertakings requested of ADM by the Treasurer.

ADM continues to maintain a 19.85% share of GrainCorp, and Woertz noted that the company "will look to work with (GrainCorp) to maximize returns on our investment and create value for both companies."