Japan, South Africa approve ADM's GrainCorp deal

Published on: Jul 24, 2013

REGULATORY agencies in five countries have now signed off on ADM’s $3 billion deal to purchase Australian grain handling giant GrainCorp. Japan’s Fair Trade Commission informed the company July 23 that it approved the transaction, following similar action by South Africa’s Competition Commission and Canada’s Competition Bureau earlier in the month.

 The U.S. Federal Trade Commission signed off on the deal last November, and the Australian Competition and Consumer Commission announced in June that they had no objections to the deal. ADM says it continues to work with authorities in both countries, as well as those in China, the European Union and South Korea, to bring the transaction to fruition.

One farmers group in Australia isn’t too happy with GrainCorp’s potential new ownership, however. During the group’s annual meeting July 18, members of the New South Wales Farmers Association voted unanimously to call on Australia’s Federal Treasurer to block the sale based on the potential for anti-competitive behavior from ADM once the sale is closed.

“Growers are concerned that ADM taking control of GrainCorp’s monopoly position in eastern Australia is likely to further erode competition for farmers’ grain and increase storage, handling and transport fees that already eat substantially into farmers’ livelihoods,” said NSW Farmers Grains Committee Chair Mark Hoskinson, who also testified during a Senate inquiry into the transaction.

“The deal is also likely to remove Toepfer from the grain buying market and would impact on domestic processing as a result of ADM’s 16 percent shareholding in Wilmar, which is the largest shareholder of Goodman Fielder,” he explained. “Our members are concerned that ADM’s history in other nations shows cause for concern about how it will impact competition if it was to control 80% of the upcountry and port grain handling facilities in eastern Australia.”

According to published reports in Australia, 15% of GrainCorp shareholders, half of whom are also grain growers, have already agreed to sell their shares to ADM, including the country’s largest wheat farmer. ADM already controlled nearly 20% of the company through 2012 acquisitions that essentially forced the takeover talks in the first place.