Hockey blocks US takeover of GrainCorp
Treasurer Joe Hockey has blocked an American food giant’s bid for GrainCorp, saying the takeover would be against the national interest.
Hockey says he reached his decision on Archer Daniels Midland’s $3.4 billion offer for Australia’s largest grains handler after “long and careful” deliberation.
“For me to reject this proposal, I had to determine that the acquisition of GrainCorp by ADM is contrary to the national interest,” Hockey told reporters in Sydney on Friday.
“Based on all the available information, I have now made that decision.”
The surprise announcement comes after months of vocal opposition to the sale from the Nationals and rural Liberal MPs.
Hockey says the Foreign Investment Review Board (FIRB) was split on the takeover and ultimately unable to make a consensus recommendation on whether it should proceed.
The treasurer said he decided “now is not the right time” for a 100 per cent takeover because the transition towards more robust competition in the sector is ongoing.
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He also felt the takeover risked undermining public support for foreign investment more generally.
But he rejected suggestions his decision would send a message to investors that Australia is closed for business.
“Of the 131 significant foreign investment applications we have dealt with, this is the only application we have prohibited,” he said.
Hockey said his decision was made in the full knowledge of a ADM’s enhanced offer, made public earlier this week.
He says he considered approving the takeover with conditions but ultimately decided there was “no appropriate conditions that would mitigate the national interest concerns”.
ADM said it was disappointed by Hockey’s decision.
“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,” ADM Chairman and chief executive Patricia Woertz said in a statement.
Shadow Treasurer Chris Bowen said it’s clear the greatest obstacle to foreign investment in Australia is federal cabinet.
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“This was the first big test for Mr Hockey and his claim that Australia is open for business – and he has failed,” Bowen said.
But the treasurer has decided not to cap ADM’s shareholding of GrainCorp at its current level of 19.85 per cent.
“I’m inclined based on current circumstances to approve any proposals from ADM to increase its shareholding in GrainCorp up to an interest of 24.9 per cent,” he said.
Agriculture Minister Barnaby Joyce, a Nationals MP, welcomed the decision, saying grain growers were “dead against” the takeover proposal.
He also believes the rejection will help protect Australia’s food security.
“In the next 50 years, the world will consume more food than it has in the history of humankind on the planet,” he told ABC Radio.
“We want to make sure Australia’s got the best potential to be a larger player and benefactor of that.”
Nationals MP Andrew Broad denied Hockey’s decision was based on appeasing his party.
“That’s nonsense,” he told ABC TV.
“The treasurer made a call, he didn’t reveal his hand to people, he went through the process in the most appropriate way.”
