Archer Daniels Midland has made additional commitments to the Australian agriculture sector as it seeks approval to take control of GrainCorp.
US food giant Archer Daniels Midland (ADM) has enhanced its takeover offer for GrainCorp with extra commitments to the Australian agriculture sector.
ADM is promising an extra $200 million investment in GrainCorp’s grain storage and handling network, including improvements to rail infrastructure, and caps on grain handling and storage charges at silos and ports.
ADM also says it is committed to providing access to grain infrastructure for growers and third parties, and will ensure an “open access” regime for port services.
Treasurer Joe Hockey is due to make a decision on ADM’s proposed takeover of GrainCorp on December 17.
ADM’s $3.4 billion offer has been opposed by the Nationals and some rural Liberals.
ADM grain president Ian Pinner said the company had held substantive talks with growers, policymakers and other stakeholders during its efforts to secure approval for its acquisition.
“Taking into account the feedback we received, we are committing to a further package of investments and initiatives to help ensure that Australian agriculture is able to serve a key role in meeting growing global demand,” he said.
“These commitments are in addition to the existing capital expenditure and other commitments we have set out in our bidder’s statement, which included a $50 million enhancement to GrainCorp’s planned capital expenditure over the next few years.”
ADM said GrainCorp’s port services would be operated according to the current “open access” regime and the mandatory industry code of conduct when it is finished.
Current access arrangements will be continued for GrainCorp’s up-country silos.
ADM said increases in GrainCorp’s overall grain handling and storage charges would be capped to inflation for three years.
GrainCorp chairman Don Taylor said ADM’s new commitments were a compelling opportunity for the grain industry in eastern Australia.
“While our industry has a range of views on many issues, there is general agreement that Australian agriculture needs significant and ongoing capital investment to ensure we are able to respond to rapidly growing global demand for food,” Mr Taylor said.
“Clearly new investment of the scale outlined by ADM today will benefit growers and our industry by improving the efficiency and international competitiveness of our network.”
Shares in GrainCorp were 58 cents higher at $11.76 at 1328 AEDT.
Queensland Premier Campbell Newman, who worked as an export operations manager at Grainco Australia before GrainCorp acquired the company in 2003, said he supported the idea of ADM buying Australia’s biggest grain handler with conditions.
“I’m totally supportive of that takeover … but very clearly there’s an opportunity to put some conditions in place that should have been put in place a decade ago,” he told a business lunch in Brisbane.
“We need competition.”
But Mr Newman suggested that GrainCorp be forced to sell two port terminals before the sale to ADM could proceed.
“It could be say Brisbane, it could be say Port Kembla,” he said.