* ADM aiming for year-end completion for $2.8 bln takeover
* New Australian govt seen approving plan despite opposition
* Australian regulator seldom blocks deals,
By Tom Polansek and Jackie Range
CHICAGO/SYDNEY, Sept 26 Archer Daniels Midland
Co said it expects to complete its acquisition of
Australian grain handler GrainCorp Ltd by the end of
the year, as it hangs on approvals from Australia's new
government and other regulators.
Australia's Foreign Investment Review Board is expected to
approve the A$3.0 billion ($2.8 billion) deal after it had been
held up by the country's general election earlier this month,
which was won by the business-friendly conservative opposition.
The deal is the first test of new Prime Minister Tony
Abbott's commitment to keep Australia "open for business" in the
face of strong opposition from some of his rural-based
colleagues, who fear the country is selling off the farm.
"We're very anxious to put that (GrainCorp) as part of our
family and part of our portfolio," ADM Chief Executive Patricia
Woertz told business leaders in Chicago on Wednesday,
reiterating the previously announced timeline.
ADM's planned purchase of GrainCorp, announced in April, is
the latest move in the rapid consolidation of the global grains
sector amid intense competition to feed fast-developing
countries like China.
Global expansion is central to ADM's long-term growth
strategy, with the GrainCorp deal expected to increase exports
to China and the Middle East, Woertz said.
Doubts about the deal being completed linger, however.
Abbott's investment friendly rhetoric had been undercut by
agitation from his Liberal Party's junior coalition partner, the
rural-focused National Party, which has voiced concern about
GrainCorp's sale and led a push for tighter rules on foreign
investment in farms and agricultural businesses.
But in a clear sign the new leader is prepared to drown out
the internal opposition, Abbott last week named one of his
senior Liberal Party colleagues as trade minister, a position
that has traditionally gone to a Nationals lawmaker in Coalition
"I can't really see on what grounds they would stop (the
deal) without in doing so foreshadowing a massive change in the
hospitality of Australia to foreign investment," said Alan
Moran, director of the deregulation unit of the Institute of
Public Affairs, a Melbourne-based think tank.
Only a handful of foreign investment deals are rejected by
Australian authorities each year and ADM's tilt at GrainCorp is
far from the first foreign deal in the agriculture sector.
Other precedent-setting approvals include Canadian company
Viterra's acquisition of ABB Grain Ltd for $1.4 billion in
September 2012, and Japanese trading house Marubeni Corp's
$5.6 billion purchase of U.S. grain merchant Gavilon,
which also had Australian assets.
Prospective deals are examined by the Foreign Investment
Review Board to determine whether they are contrary to the
national interest. Given that relatively light regulatory
requirement, Australia is generally seen as more open to foreign
investment than some other countries such as Canada or New
Any potential delay or block to the GrainCorp-ADM deal is
considered to be more likely to come from China, whose Ministry
of Commerce must also approve the deal because of the Australian
company's ownership of a bulk liquid port terminal in Shanghai.
The sweetened A$13.20 a share offer from ADM that won over
in April came with a pledge to pay GrainCorp shareholders a 3.5
cent per share dividend for each full month from Oct. 1 until
the deal is approved or rejected.
That clause was viewed as a buffer against any delays from
Chinese regulators, while a 4.1 percent fall in GrainCorp's
shares from a high of A$12.83 when deal was announced reflects
both the likelihood of a delay and some concerns the deal might
not go through.
ADM, meanwhile, has been working hard to market the new
business to grain growers, a key rural constituency for the
Nationals, by promising to support the Australian supply chain.
"It is frustrating that this is being pitched as a foreign
investment thing," said Daniel Cooper, a farmer in New South
Wales. "For us, it is about what is the benefit in the
transaction? Looking at it, I just don't see how any politician
can see a reason to give it the green light."
East coast grain farmers fear an ADM-owned GrainCorp will
squeeze them on price and doubt the U.S. agribusiness firm's
commitment to maintaining Australia's vast supply network.