This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Australian Government Officials at Odds Over GrainCorp Deal

NEW YORK (The Deal) -- Archer Daniels Midland (ADM - Get Report) faces a nervous wait to discover if its A$3.4 billion ($3.24 billion) deal for Australia's GrainCorp will win Treasury approval next month, as government infighting over the acquisition this week spilled out into the public domain. 

The fault lines were laid bare Wednesday, Nov. 6, when Australia's Treasurer Joe Hockey told a press conference that he will "not be bullied or intimidated by anyone" as he ponders whether to approve the deal. A decision is due by Dec. 17. 

Hockey, who is part of the pro-market Liberal Party, did not name his tormentors but his comments come days after Deputy Prime Minister Warren Truss said that selling GrainCorp would undermine Australia's food security and its future as a major agricultural centre. Truss is the leader of the Australian National Party, the coalition's junior partner. The party draws the bulk of its support from Australia's farming communities. 

"If we don't own any of the supply chain, it will be very difficult for us to ever make decisions which can influence whether or not our grain industry is to prosper," Truss told state-owned Australian Broadcasting Corporation, or ABC. "If we lose our biggest agribusiness from our stock opens questions about whether Australia is really going to be an international center for commerce, for agriculture and for industry in the future." 

Must Read: The Deal: FTC Hears Jewish Group's Concern on Funeral Deal

Under Australia's foreign takeover rules the Treasurer has the final say on Archer Daniels Midland's bid for GrainCorp, which is the largest grain handler on Australia's east coast. The sale of GrainCorp would place substantially all of Australia's grain export infrastructure under foreign ownership and leave about 60% of all grain exports under the control of three companies - Archer Daniels Midland and Cargill Inc., of the U.S., and Switzerland-based Glencore Xstrata

Decatur, Ill.-based Archer Daniels Midland offered A$12.20 per GrainCorp share in June this year and had initially expected to complete its offer by August. Those plans were waylaid when the-then Prime Minister Julia Gillard was ousted by her own Labor Party in June, sparking elections which installed the new government. 

The delay has already cost Archer Daniels Midland. Its offer includes a A$0.035-per-share dividend for each whole month that the bid is delayed beyond Oct. 1. 

Archer Daniels Midland has been doing its best to ease the concerns of Australian politicians and farmers. Its grain division president Ian Pinner on Wednesday praised GrainCorp's current management and claimed Archer Daniels Midland could provide Australian grain growers with greater access to foreign markets. 

"What we're looking to do is bring additional benefits to growers through investment in the infrastructure, through improving the supply chain...and opening up this global market," he told ABC radio. 

Shares in GrainCorp closed Wednesday at A$12.20, up A$0.13, or just over 1% on their Tuesday close.

Written by Paul Whitfield

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ADM $36.46 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%
TSLA $231.61 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs