Milling & Baking News - December 10, 2013 - 14

Business 

ADM's A$3.6 billion bid to acquire
GrainCorp rejected by Australia
SYDNEY, AUSTRALIA - The Australian government has rejected Archer Daniels Midland Co.'s proposed
acquisition of GrainCorp Ltd., stating
that the transaction is contrary to the
nation's interest.
The decision to reject ADM's proposal was made by Joe Hockey, treasurer of Australia, under the auspices
of that nation's Foreign Investment
Review Board.
"The Australian grains industry
is an important export industry that
has been transitioning through a significant deregulation process since
the abolition of the wheat exports
single desk in 2008," Mr. Hockey
said. "Since then, deregulation has
brought benefits through a significant expansion in the number of bulk
wheat exporters, an expansion in our
overseas customer base and the construction of new infrastructure.
"But, although a number of new
players have entered the market and
new infrastructure is being built, it is
still taking some time for increased
competition to emerge. Owning over
280 upcountry storage sites and 7 of
the 10 grain port terminals in New
South Wales, Queensland and Victoria, GrainCorp continues to account
for a significant share of eastern
Australian storage, distribution and
marketing of grains. Approximately

85% of eastern Australia's bulk grain
exports are handled through GrainCorp's ports network.
"Many industry participants, particularly growers in eastern Australia,
have expressed concern that the proposed acquisition could reduce competition and impede growers' ability

'Many industry participants, particularly growers in
eastern Australia, have expressed concern that the
proposed acquisition could reduce competition and
impede growers' ability to access the grain storage,
logistics and distribution network.'
- Joe Hockey, treasurer of Australia

to access the grain storage, logistics
and distribution network. Given that
the transition toward more robust
competition continues and a more
competitive network is still emerging,
I consider that now is not the right
time for a 100% foreign acquisition of
this key Australian business."
This past June, ADM submitted a
"bidder's statement" with the Australian Securities and Investments
Commission detailing an all-cash
offer for GrainCorp's assets worth
A$3.4 billion. Decatur, Ill.-based ADM
then enhanced its takeover offer on
Nov. 26 with a package of additional

GrainCorp c.e.o. resigns
SYDNEY, AUSTRALIA - Alison Watkins, managing director and chief executive officer of
GrainCorp Ltd., announced her resignation on Dec. 2, just a few days after Joe Hockey,
treasurer of Australia, announced he would not allow Archer Daniels Midland Co. to
buy GrainCorp. Ms. Watkins is expected to assist in the transition of new leadership at
GrainCorp through January 2014 before leaving to join Coca-Cola Amatil Ltd. as group
managing director on March 3, 2014.
"It is with great regret that the board has accepted Alison's resignation, however we
respect her decision to move on, particularly when a change of control in GrainCorp was
broadly expected to occur over the coming weeks," Chairman Don Taylor said. "Alison
leaves a lasting legacy at GrainCorp; our business has sharpened its strategic focus,
diversified its earnings base and made sound progress on our initiatives to deliver an
additional $110 million of underlying earnings."
Ms. Watkins said her decision had been enormously difficult and was made with
great sadness.
"I had planned to leave the company at the time control passed over to ADM," Ms.
Watkins said. "Given last week's unexpected developments, I feel it is in the best interests of GrainCorp, our people and customers that I move on now and allow the board to
find new leadership to take the business forward into its new phase."
Mr. Taylor said that an external and internal search for a replacement had commenced. Mr. Taylor will assume a temporary role as executive chairman immediately
and will be acting c.e.o. from mid-January 2014, filling these roles until the appointment
of a new c.e.o. MBN

14 / December 10, 2013 Milling & Baking News

commitments. As part of its last-ditch
effort to sway Australian authorities,
ADM pledged an additional A$200
million investment to strengthen
GrainCorp's Australian grain storage
and handling network, with specific
emphasis on rail enhancement projects. The company also eyed price caps
on grain handling charges at silos and
ports, and committed to grain infrastructure access for growers and third
parties and an "open access" regime

for port services. The commitments
were in addition to existing capital
expenditure and other commitments
ADM set out in its bidder's statement.
"We are disappointed by this decision," said Patricia Woertz, chairman
and chief executive officer of ADM.
"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.
"Throughout this process, we
worked constructively to create an
arrangement that would be in Australia's best interests and made substantial commitments to address issues
that were important to stakeholders."
Concerning ADM's plans for its
current investment in GrainCorp, Ms.
Woertz said, "As owner of 19.85% of
GrainCorp, we will look to work with
them to maximize returns on our investment and create value for both
companies."
Ms. Woertz also noted that ADM now
will review its capital allocations, including shareholder distribution alternatives, as part of its 2014 business plan
process that is currently under way.
"We have an attractive pipeline of opportunities that are consistent with our
focus on value creation and fit our strategy for profitable growth," she said.
Mr. Hockey said he would approve
any proposal from ADM to increase
its investment in GrainCorp up to an
interest of 24.9%.
"This would also provide a platform for ADM to build stakeholder
support for potentially greater participation in the Australian industry as it
develops," he said. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - December 10, 2013

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