By a staff reporter
Archer Daniels Midland Company has sweetened its bid for Australia’s GrainCorp Ltd with a package of additional commitments.
The news sent GrainCorp shares surging. At 1235 AEDT, GrainCorp was 4.92 per cent higher at $ 11.73 against a benchmark index fall of 0.24 per cent.
In earlier trade GrainCorp shares hit as high at $ 11.85.
In a statement, ADM said it would commit an additional $ 200 million to strengthen Australia’s agricultural infrastructure, particularly through rail enhancement projects.
The suitor also flagged price caps on grain handling charges at silos and ports, commitment to grain infrastructure access for growers and third parties and a commitment to an “open access” regime for port services.
“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 and ADM,” ADM grain president Ian Pinner said.
“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.”
Mr Pinner said the commitments are in addition to the existing capital expenditure and other commitments set out in its bidder’s statement, which included a $ 50 million enhancement to GrainCorp’s planned capital expenditure over the next few years.
“The additional capital investment that ADM will bring to GrainCorp represents a 100 percent increase in GrainCorp’s original $ 250 million capital expenditure budget prior to ADM’s proposal,” he said.
“Taken together, the capital investments ADM has committed to support or make for the GrainCorp business total $ 500 million.”
Treasurer Joe Hockey is due to make a decision on ADM’s proposed takeover of GrainCorp on December 17.
ADM’s $ 3.4 billion offer has been opposed by the Nationals and some rural Liberals.
ADM grain president Ian Pinner said the company had held substantive talks with growers, policymakers and other stakeholders during its efforts to secure approval for its acquisition.
“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,” he said.
ADM said increases in GrainCorp’s overall grain handling and storage charges would be capped to inflation for three years.
GrainCorp chairman Don Taylor said ADM’s new commitments were a compelling opportunity for the grain industry in eastern Australia.
“While our industry has a range of views on many issues, there is general agreement that Australian agriculture needs significant and ongoing capital investment to ensure we are able to respond to rapidly growing global demand for food,” Mr Taylor said.
“Clearly new investment of the scale outlined by ADM today will benefit growers and our industry by improving the efficiency and international competitiveness of our network.”