Australian antitrust regulator will not oppose ADM bid for GrainCorp

02 July 2013 17:01  [Source: ICIS news]

HOUSTON (ICIS)--The Australian Competition and Consumer Commission (ACCC) announced Tuesday it will not oppose Archer Daniels Midland's (ADM) proposed $3.3bn (€2.4bn) acquisition of Australian agriculture company GrainCorp.

Presently ADM owns 19.8% of GrainCorp shares and in 2012 attempted to acquire the company but was rejected. In early May, an increase bid was approved and recommended to GrainCorp’s board of directors.

Regional agricultural producers have expresed concerns that the loss of GrainCorp would cause infrastructure issues and lessen their role in the supplying of commodities. ADM’s stance on the potential takeover is that the merger will benefit Australian growers and increase access to global markets in Asia and the Middle East.

ACCC officials said the decision was based on a review that examined whether the transaction would substantially lessen competition in the market and if the merging of the two companies would deny access to the storage and transportation supply chain.  

“The ACCC concluded that the proposed acquisition would be unlikely to substantially lessen competition as the merged entity would continue to face competition from a number of sources,” said Rod Sims, ACCC chairman.

Lobbying group NSW Farmers had recently requested the government only approve the purchase of GrainCorp if the company agreed to four provisions. Those conditions would require that ADM sell one or more ports to be acquired, allow continued access to storage facilities, share stock information and make investments in the railroad infrastructure.

Australia exports approximately 70% of its farm products, but since 2008, nearly all the export infrastructure is controlled by foreign entities. Analysts have pointed out that it is in critical need of investment in order to meet future trade challenges.

In June, ADM Group President Ian Pinner said access to the ports would not be an issue for the company. Pinner also the company does not plan on disrupting what its views 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.

The acquisition now requires approval from both the shareholders of GrainCorp and from China authorities, where GrainCorp holds assets.

($1 = €0.77)

By: Mark Milam
+1 713 525 2653

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