31 May 2013 21:07 [Source: ICIS news]
HOUSTON (ICIS)--Awaiting approval from shareholders and foreign regulators on a $3.3bn bid for Australian agriculture company GrainCorp, Archer Daniels Midland (ADM) Group president said Friday that the company believes the acquisition will benefit agriculture producers.
ADM sees their takeover of the company as ultimately enhancing Australian growers and increasing their access to thriving global markets in Asia and the Middle East. However, some farmers are expressing concerns that the loss of GrainCorp would cause infrastructure issues and lessen their ability to have a means of influence in the supplying of commodities they produce.
Presently ADM owns 19.8% of GrainCorp shares and had attempted in 2012 to acquire the company but was rejected in December. In early May an increased bid was approved and recommended to GrainCorp’s board of directors.
Lobbying group NSW Farmers recently requested that Australian Treasurer Wayne Swan only approve the purchase of GrainCorp if the company agrees to four provisions. Those conditions would require that ADM sell one or more ports to be acquired in the transaction, that they allow access to the storage facilities on the eastern part of the country, share stock information and make a commitment to investments in the railroad infrastructure.
Australia exports approximately 70% of its farm products but since 2008, when there was the dissolving of the country’s exporting body, nearly all the export infrastructure is controlled by foreign entities. Analysts have said that it is in critical need of investment in order to meet future trade challenges.
ADM Group President Ian Pinner said access to the ports would not be an issue for the company and that his company does not plan on disrupting what they view as a successful system. If approved, the acquisition would give ADM control of seven eastern ports which take in 90% of the region’s grain exports.
“We don’t want to change a system that already works well for Australia’s growers. GrainCorp’s entire infrastructure, storage, transportation, and ports has served Australian growers well, and we intend to use our resources to help build on that success. We have made known our commitment to open access to ports on several occasions and that has not changed,” said Pinner.
“ADM has a 110-year history of working closely with growers to connect growers to markets around the globe. We strongly believe that our proposal will benefit Australian growers, and we are committed to working with them to address any concerns they may have.”
Currently, the company is waiting to receive approval from both the shareholders of GrainCorp and from regulators in Australia and China, where GrainCorp holds assets. ADM is unsure as to when a decision will be made.
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