South Australia farmer group opposes bid for ABB Grain

 

 

The South Australian Farmers Federation grains industry committee Monday reiterated its opposition to a proposed acquisition of ABB Grain Ltd. by Canada-based Viterra Inc., citing monopoly concerns.

 

Shareholders in ABB Grain, which dominates grain storage and export logistics in South Australia state, are scheduled to vote on Viterra takeover proposal on September 9.

 

Chairman of the committee, Michael Schaefer, said it was alarmed by Friday profit guidance downgrade, the third in the past four months, with growers raising concerns about the ability of the company to manage the storage and handling system with forecasts of an above average harvest in most areas of the state.

 

Chronic problems with the supply chain in South Australia could be helped by Viterra superior supply chain logistics experience and capital raising ability, he said in a statement.

 

"However issues regarding monopoly control of supply chain assets still caused anxiety for growers," he said.

 

Talks between the committee and executives from Viterra and ABB Grain in recent weeks have helped the understanding of each party position on the takeover and on undertakings to antitrust regulator, the Australian Competition and Consumer Commission, regarding monopoly control of the export chain, he said.

 

While Viterra and the new ABB Grain management team have been positive about transparency and the management of the supply chain, the committee can't support any change without seeing the commitment by ABB Grain in the ACCC undertakings, with time running out before the voting deadline, he said.

 

"Access undertakings have still to be finalised with the ACCC and concerns over the monopoly control were yet to be addressed," he said. "Until such commitments were made, SAFF Grains couldn't recommend growers support the buyout."

 

Viterra unveiled the bid for ABB Grain in April, pitching its proposal in a mix of cash, Viterra shares and franked dividends between A$9.00 and A$9.50 a share. If the proposal is accepted at a value of A$9.50 a share, it would value ABB Grain at A$1.64 billion.

 

UBS analysts said Monday they believe the risk of growers, who own almost half of ABB Grain shares, rejecting the Viterra offer remains high.

 

US$1 = A$1.19192 (Aug 31)