AUSTRALIA: Australia Foreign Investment – Treasurer rejects ADM`s acquisition of GrainCorp on national interest grounds

Friday November 29 2013

An order has been made in respect of a limitation of Australia foreign direct investment.

The Australian Treasurer Joe Hockey has announced that he has made an order under the Australian Foreign Acquisitions and Takeovers Act 1975 prohibiting the proposed acquisition by Archer Daniels Midland Company (ADM) of 100 per cent of the shareholding in GrainCorp Limited (GrainCorp).

ADM’s proposal was first lodged with the Foreign Investment Review Board (FIRB) in May 2013. ADM has withdrawn and re-submitted its application a number of times.

The proposed acquisition of GrainCorp by ADM has been one of the most complex cases to come before the FIRB and it is one of the most significant proposed acquisitions of an agricultural business in Australia’s history.

Owning over 280 up‑country storage sites and seven of the ten grain port terminals in New South Wales, Queensland and Victoria, GrainCorp accounts for a significant share of eastern Australian storage, distribution and marketing of grains. Approximately 85 per cent of eastern Australia’s bulk grain exports are handled through GrainCorp’s ports network.

Many industry participants, particularly growers in eastern Australia, expressed concern that the proposed acquisition could reduce competition and impede growers’ ability to access the grain storage, logistics and distribution network. Given that the transition towards more robust competition continues and a more competitive network is still emerging, the Minister considered that now is not the right time for a 100 per cent foreign acquisition of a key Australian business.

A further significant consideration was that this proposal has attracted a high level of concern from stakeholders and the broader community. The Minister therefore judged that allowing it to proceed could risk undermining public support for the foreign investment regime and ongoing foreign investment more generally, which would not be in the national interest.

ADM has advised me that it wishes to be involved in the Australian market place for the long term.

ADM currently owns 19.85 per cent of GrainCorp. It was open to the Minister, under the Act, to continue to cap ADM’s shareholding in GrainCorp at its current level. The Minister decided not to do so.

Click on the above link for the press release.