Australia Rejects ADM’s $2B GrainCorp Offer

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Nov. 29 (Bloomberg) -- Archer-Daniels-Midland Co.’s A$2.2 billion ($2 billion) takeover of GrainCorp Ltd. was blocked by Australia, prompting a record drop in shares of the east coast’s biggest crop handler and a slide in the local currency. Matthew Campbell reports on Bloomberg Television's "The Pulse." (Source: Bloomberg)

Covering adm.

Australia blocked the $2 billion takeover.

He joins us to talk about this.

This was -- this is quite illogical to block this deal.

Walk us through why this happened.

We do not often get excited about australia and korea and marketing.

In this case, it tells us and -- a couple of interesting things.

It is australia's new government under tony abbott.

It came into office saying australia is open for business and it would be friendlier to big is missed in the previous labor government.

It has a very significant rural constituency.

The nationals are farmers.

They were very upset about the notion of a big american agribusiness giant taking over the main grain corporation on the east coast of australia.

There was significant political opposition.

At the end of the day, the australian government had to say, we are not going to allow this to happen.

What is so interesting about graincorp?

Australia is of the great rain exporters of the world.

The east coast australian ports are close to asia, indonesia, china.

For a company like adm, looking to have a role in the global grain market, that was one of the few obvious targets.

There is another one that was bought a glenn core -- by glencore.

Graincorp was one of the last of these assets available and adm thought, we are going to lock it up.

It has not worked out.

It kind of feels like a one- off.

Nevertheless, can they grow an organic business here?

Can they start what they want to do but it will take a lot longer?

One thing we may see is for have it -- is for adm to have a stake.

They could build a strategic partnership where they cooperate on kurt -- on certain things, regulatory approval permitting.

There are things you can do.

Grain is a very infrastructure- heavy business.

You need ports, silos, processing facilities.

It is hard to build up on your own.

Buying graincorp was an easy way for adm to do this.

This text has been automatically generated. It may not be 100% accurate.


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