CANBERRA--U.S. agribusiness Archer Daniels Midland Co. (ADM)
stepped up efforts to overcome political and grower opposition in
Australia to its 3 billion Australian dollar (US$2.9 billion) bid
for Australian grain handler GrainCorp Ltd. (GNC.AU), promising
extra spending on rail infrastructure and price caps on access to
silos and ports.
Australia's Foreign Investment Review Board, or FIRB, is due to
decide by Dec. 17 on whether to approve the deal, impose conditions
on it, or reject it altogether. As part of that watchdog review,
Treasurer Joe Hockey will decide whether the deal is in Australia's
national interest.
ADM said in a statement that it would offer an extra A$200
million to improve agricultural infrastructure to secure the deal,
with specific emphasis on rail networks, promising price caps on
grain handling fees at up-country silos and GrainCorp port
facilities. Growers have expressed concern they could be hit by
higher grain-handling fees if the ADM purchase gets the green
light.
"Throughout our effort to secure approvals for our proposed
acquisition of GrainCorp, 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's grains
chief. "We have had substantive discussions with growers,
policymakers and other stakeholders."
Graincorp shares rose as much as 5% in Sydney trading following
ADM's statement.
ADM also promised an "open access' regime for port services, as
well as a grower and community consultation board in the three
eastern seaboard states where GrainCorp has a near monopoly on the
industry.
Trading houses have been pushing hard into Australia's grain
sector since the breakup of the government's central exporting
agency in 2008.
A deal for GrainCorp would see 60% of wheat shipments from
Australia controlled by three companies--ADM, Glencore Xstrata PLC
(GLEN.LN) and Cargill Inc. It would also put almost all of the
country's export infrastructure under foreign ownership.
Write to Rob Taylor at rob.taylor@wsj.com
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