ADM Disappointed As Australia Rejects GrainCorp Deal

(RTTNews) - Grain processor Archer Daniels Midland Co. (ADM) Thursday said it was disappointed by the decision of Australia to prohibit the company's proposed acquisition of Australian grain handler and processor GrainCorp Limited (GRCLF, GNC.AX). Australian Treasurer Joe Hockey said the proposed deal was contrary to the national interest.

Commenting on the rejection, ADM Chairman and CEO Patricia Woertz said, "We are disappointed by this decision. We are confident that our acquisition of GrainCorp would have created value for shareholders of ADM and GrainCorp, as well as grain growers and the Australian economy."

It was on May 1 that ADM said it completed due diligence on GrainCorp and plans to make a cash offer to acquire the company for a sweetened A$12.20 per share. The offer indicates a transaction value of about A$3.4 billion, or $3.49 billion.

The Australian Competition and Consumer Commission said in June that it does not propose to oppose the proposed acquisition. The deal also received clearance from the Competition Commission of South Africa as well as Japan Fair Trade Commission.

On November 26, ADM announced a package of additional commitments related to the offer, including another A$200 million investment to strengthen Australian agricultural infrastructure, with specific emphasis on rail enhancement projects.

''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,'' the treasurer said today in a statement. The FIRB stands for the country's Foreign Investment Review Board.

Hockey judged that allowing the deal to proceed could risk undermining public support for the foreign investment regime and ongoing foreign investment more generally.

Woertz confirmed that there were no conditions or undertakings requested of ADM by the Treasurer. She added that throughout the process, the company worked constructively to create an arrangement that would be in Australia's best interests. The company made substantial commitments to address issues that were important to stakeholders.

Concerning ADM's plans for its current investment in GrainCorp, Woertz said, "As owner of 19.85 percent of GrainCorp, we will look to work with them to maximize returns on our investment and create value for both companies."

Further, as a result of this development, ADM is reviewing its capital allocations, including shareholder distribution alternatives, as part of its 2014 business plan process currently underway.

ADM closed down 0.3 percent on Wednesday at $41.49.