By Rob Taylor
SYDNEY--Australia blocked a 3.0 billion Australian dollar
(US$2.7 billion) bid by U.S. agribusiness company Archer Daniels
Midland Co. (ADM) to buy grain handler GrainCorp. Ltd. (GNC.AU) on
grounds that a takeover would go against the national interest.
The move follows lobbying by farmers and some conservative
politicians against the deal, which would have seen 60% of wheat
shipments from Australia controlled by three companies--ADM,
Glencore Xstrata PLC (GLEN.LN) and Cargill Inc. It would also have
put almost all of the country's export infrastructure under foreign
ownership.
However, a decision to veto the deal also raises questions about
the commitment of the new center-right Liberal-National government
to welcoming foreign investment, seen as critical to supporting a
slowing economy as a decadelong resources boom ends.
"The proposed acquisition of GrainCorp by ADM has been one of
the most complex cases to come before Firb, and it is one of the
most significant proposed acquisitions of an agricultural business
in Australia's history," Treasurer Joe Hockey said.
Mr. Hockey said he took the decision after the Foreign
Investment Review Board, or Firb, was split on whether to allow the
deal to proceed. The watchdog had until Dec. 17 to decide whether
to approve the deal, impose conditions on it, or reject it
altogether.
Earlier this week, ADM made a late move to sway the decision in
its favor, promising to spend A$200 million more on rail
infrastructure. It pledged to cap grain-handling and storage
charges at the rate of inflation for three years in an attempt to
address growers' concerns that they could be hit by higher
grain-handling fees.
ADM also promised an "open access" system 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. It said third-party grain marketers would be able to
access grain-storage and receiving sites.
"We are disappointed by this decision," said Patricia Woertz,
ADM's chairman and chief executive, in a statement. "Throughout
this process, we worked constructively to create an arrangement
that would be in Australia's best interests and made substantial
commitments to address issues that were important to
stakeholders."
However, Mr. Hockey said he believed that the takeover would
have been against Australia's national interest at a time when the
grains industry was undergoing a significant transition from a
single wheat export market desk in 2008. GrainCorp owns 280 rural
storage silos and seven of the 10 grain port terminals on the east
coast.
This would have seen ADM take over a company that held a
commanding market position, even though the Australian Competition
and Consumer Commission had already given the deal the green
light.
As a result, no conditions offered by ADM would have been
acceptable to the government that could have allowed the deal to
proceed, Mr. Hockey said.
The ADM-GrainCorp deal is only the third takeover to be rejected
by Australia in little more than a decade, the last coming in 2011
when Singapore Exchange Ltd. (S68.SG) was prevented from buying
main stock market operator ASX Ltd. (ASX.AU) for A$8.4 billion.
Prior to that, Royal Dutch Shell PLC's (RDSB) attempt to buy
Woodside Petroleum Ltd. (WPL.AU) in 2011 was also rejected.
-Write to Rob Taylor at rob.taylor@wsj.com
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