27 November 2013 16:05 [Source: ICIS news]
HOUSTON (ICIS)--Archer Daniels Midland (ADM) has pledged additional investment in agricultural infrastructure in response to concerns raised by the Australian public and to expedite its acquisition of agriculture company GrainCorp, the agribusiness titan confirmed on Friday.
ADM said it has committed itself to an additional Australian dollars (A$) 200m ($182m, €135m) to strengthen the country's agriculture, with an emphasis on railway projects. The company has also agreed to guidelines regarding pricing, port access and stock information.
ADM is pursuing acquiring Australia's GrainCorp in a $3.3bn deal and has received clearance from seven governmental agencies including Australia, Canada, the European Commission, South Korea, South Africa, Japan and the US Federal Trade Commission (FTC).
Regulators in China and officials with Australia’s Foreign Investment Review Board have yet to sign off on the transaction, but ADM said that Australian authorities have indicated a decision will be made by mid-December.
No time estimates has been provided on China’s decision, but company officials said earlier this year that they anticipate that the transaction will close in Q1 2014.
ADM has committed to price caps on grain handling charges at silos and ports and reasserted that it will provide open infrastructure access for growers and third parties. It has also proposed creating a grower and community advisory board with representation from New South Wales, Victoria and Queensland, as well as having a regular grower consultation. In addition, the company pledged support for providing expanded grain stocks information.
“We have worked constructively to create value for grain growers and the Australian economy as well as shareholders of GrainCorp and ADM," said Ian Pinner, ADM Grain president. "We have had substantive discussions with growers, policymakers and other stakeholders, and we’ve been committed to finding common ground and developing solutions that address issues and opportunities that have been raised."
Pinner said the commitments are in addition to the existing capital expenditure already set to occur when the acquisition is finalised. He said the increased capital investment represents a significant increase in GrainCorp’s original A$250 million capital expenditure budget. The company did confirm that the headquarters of GrainCorp will remain in Sydney.
ADM currently owns 19.8% of GrainCorp and has taken the position that the merger will benefit Australian growers and increase access to global markets. Australia exports approximately 70% of its farm products, but the export infrastructure is in critical need of investment. If approved, the acquisition would give the company control of seven eastern ports.
($1 = €0.74, $1 = A$1.10)
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