November 1, 2013
ADM, GrainCorp grain deal remains undecided
Amid growing fears of a political backlash at the deal, Archer Daniels Midland (ADM) could be asked to submit new information to back its US$3.4 billion bid for Australia's biggest grain handler.
The requests could give the ADM an opportunity to address concerns raised within the government over the threat to wheat growers if its takeover of GrainCorp goes ahead.
As Joe Hockey takes more time to decide on the matter, objections to the deal are building among his Nationals and Liberal colleagues. While some Coalition sources privately say the deal could be rejected on national interest grounds, others insist it is likely to go through. There has been no official signal about the decision due on December 17.
ADM has lodged a takeover bid to GrainCorp shareholders but needs the Treasurer's approval under foreign investment laws. With such sales the Foreign Investment Review Board (FIRB) advises the Treasurer on the national interest.
The Australian understands that the FIRB made no recommendation before the election, due to time constraints and the caretaker period during the election campaign.
Hockey's move to extend the timeframe for a decision has thrown open the opportunity to put more questions to ADM about its plans to invest in the Australian operations if its offer succeeds.
The foreign investment ruling is one of the most difficult decisions facing the Treasurer in the coming months given the government's rhetoric about the country being "open for business" after the federal election.
Those agitating for the bid to be abolished are pointing to the Howard government's rejection of Shell's takeover bid for Woodside Petroleum a decade ago as proof that individual deals can be blocked without damaging foreign investment.
At a time when the company had lodged a conditional proposal for GrainCorp, Hockey had "serious misgivings" over ADM's intentions. Deputy Prime Minister and Nationals leader Warren Truss and Agriculture Minister and Deputy Nationals leader Barnaby Joyce have urged Hockey to block the deal.
