GrainCorp still in ADM's sights

26 Jun, 2014 04:00 AM
GrainCorp's share price returned to highs of $8.72 this week

GRAINCORP is reporting general farmer acceptance of its drastic plans to close 72 grain receival sites across its network amid ongoing speculation the big agribusiness is still a takeover target for Archer Daniels Midland (ADM).

US-based ADM continues to hold a 19.8 per cent stake in GrainCorp.

Although increased share market buying activity has centred on the local grain giant, ADM has given no indication it is ready to take up the extra 4pc allowed by Treasurer Joe Hockey after its $3 billion takeover ambitions late last year.

GrainCorp's share price, which peaked above $8.90 at the end of May, returned to highs of $8.72 this week with Ellerston Capital again confirmed as a recent buyer.

Ellerston, the former Packer family investment trust which sold a 6.5pc stake to ADM in 2012, now holds 8.7pc of GrainCorp's stock.

Stock broker Bell Potter this week rated GrainCorp's share price as over-valued, but also upgraded its recommendation to investors from "sell" to "hold" tipping a 50pc chance ADM would return with a new bid.

ADM president Juan Luciano has confirmed ADM may try to lift its GrainCorp stake at some point, but the US commodities giant is believed to be first waiting for a new managing director to settle into the job in Sydney.

Pressing ahead with its plans to shut down inefficient receival sites, and focus on upgrades at other storage points, GrainCorp has scheduled about 30 grower meetings with regional managers and senior logistics officials across Queensland, NSW and Victoria to explain the $200 million "Project Regeneration" strategy.

The company has promised to cut freight costs by $5 a tonne for farmers delivering this season's crops to sites which escape the cuts.

The meetings have attracted up to 50 growers with feedback from most areas generally acknowledging the thinking behind the rationalisation move, said corporate affairs manager Angus Trigg.

"There are areas where growers have voiced their disappointment, but in general there's been overall support for what we are thinking.

"Once people understand we are trying to get grain back onto railway lines they tend to be on board with what we're doing."

Central West NSW has proven to be one of the hot spots for dissent among grain growers.

Meanwhile, the company is not expected to appoint a new chief executive officer and managing director to replace Alison Watkins for another month, but it has appointed risk and compliance manager Gregory Greer as company secretary.

ADM, has also been busy re-jigging management roles, starting late last year when former GrainCorp logistics boss and long time executive Nigel Hart was lured across to run its ports, merchandising and logistics activities in the Asia-Pacific.

Mr Hart, who originally worked with NSW Farmers before becoming GrainGrowers executive officer then spending 15 years in GrainCorp roles ranging from company secretary to logistics, will report to Asia-Pacific president Ismael Roig, whose regional headquarters are moving from Shanghai to Singapore.

ADM said it was aligning its investments and organisation to better serve growing demand across the Asia-Pacific.

"As populations and incomes across Asia continue to rise, diets are evolving and that shift brings increased demand for crops and other agricultural products," said CEO Patricia Woertz.

Last month, ADM announced it was building a sweetener and soluble-fibre manufacturing complex at the port of Tianjin in northern China to help meet demand in Asia for high-quality food ingredients.

ADM is also constructing a third animal feed premix facility in China.

It is also upgrading marketing operations in the Asia-Pacific following its takeover of the Toepfer grain business.

Collin Benson has been named new president for ADM Australia and New Zealand based in Sydney also overseeing ADM's business in Japan and Korea.

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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Jock Munro
26/06/2014 1:44:38 PM

Can we growers have the $5.00 tonne freight reduction promise in writing? If the Liberals let ADM buy Graincorp ,it will mean the end of the partnership with the Nationals and a good long spell in opposition.


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