Australia rejects ADM’s bid to buy GrainCorp

December 3, 2013

According to Bloomberg, Archer Daniels Midland Co.’s (ADM) $2 billion takeover of GrainCorp Ltd. (GNC) was blocked by the government of Australia.

“This proposal has attracted a high level of concern from stakeholders and the broader community,” said Australia’s Treasurer Joe Hockey, ruling U.S.-based ADM’s bid isn’t in the national interest. “Now is not the right time for a 100% foreign acquisition of this key Australian business.”

GrainCorp closed down 22% in Sydney after the rejection. ADM, which currently holds a 19.9% stake in GrainCorp, agreed to buy the company for A$12.20 a share in April and the stock traded about that level until the West Australian newspaper reported on Nov. 15 that Prime Minister Tony Abbott was inclined to veto the deal.

“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,” said ADM Chairman and CEO Patricia Woertz. “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.

To encourage ADM and give it a platform to build stakeholder support, Hockey said he would likely approve any proposal by the company to raise its stake in GrainCorp to 24.9%.

Buying GrainCorp would have given ADM control of 280 storage sites and seven of the 10 ports that ship grain in bulk from the nation’s east coast.

Bloomberg article

ADM statement