ADM’s Package of Enhanced Commitments for GrainCorp Acquisition

Archer Daniels Midland Company (ADM) announced a package of additional commitments in relation to its proposed acquisition of GrainCorp Limited.

GrainCorp in Victoria Image credit: flickr User:  Chase Photography
GrainCorp in Victoria
Image credit: flickr User: Chase Photography

According to the press release featured on the Business Wire, the package includes additional A$200 million investment in agricultural infrastructure, addresses pricing, access, stock information and so on.

The key elements of the package are:

–          Additional A$200 million investment to strengthen Australian agricultural infrastructure, with emphasis on rail enhancement projects;

–          Price caps on grain handling charges at silos and ports;

–          Commitment to grain infrastructure access for growers and third parties;

–          Commitment to “open access” regime for port services;

–          A grower and community advisory board with representation from New South Wales, Victoria and Queensland, as well as regular public grower consultation; and

–          Support for expanded grain stocks information arrangements.

These commitments are set to be put into effect upon the closing of ADM’s proposed acquisition of GrainCorp.

“Throughout our effort to secure approvals for our proposed acquisition of GrainCorp, we have worked constructively to create value for grain growers and the Australian economy as well as shareholders of GrainCorp and ADM,” said Ian Pinner, president, ADM Grain.

“We have had substantive discussions with growers, policymakers and other stakeholders, and we’ve been committed to finding common ground and developing solutions that address issues and opportunities that have been raised. Taking into account the feedback we received, we are committing to a further package of investments and initiatives to help ensure that Australian agriculture is able to serve a key role in meeting growing global demand.”

Mr. Pinner further added that these commitments are in addition to the existing capital expenditure and other commitments ADM has set in their Bidder’s Statement which include a A$50 million enhancement to GrainCorp’s planned capital expenditure over the next few years.

According to him, the additional capital investment is a 100% increase in GrainCorp’s original A$250 million capital expenditure budget prior to ADM’s proposal.

All in all, the capital investments committed by ADM for GrainCorp amount to A$500 million.

“In the competitive global grains market, it makes sense to operate the most efficient supply chain and maximize utilization of every location and asset,” Mr. Pinner added.

“These investments and commitments—developed following extensive input from Australian stakeholders—will help ensure the GrainCorp network remains an attractive option for growers and third-party grain traders, and also remains a competitive source for global grain buyers.”

 

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