DEPUTY Prime Minister Warren Truss has warned Archer Daniels Midland (ADM) would face another extensive re-examination of its business operations and credentials, if the US multinational food giant made another takeover bid for GrainCorp.
The federal National Party leader was a vocal and leading critic of ADM’s unsuccessful bid to buy Australia’s largest publicly listed agribusiness for $3.4 billion which was eventually rejected in late 2013.
However, Malcolm Turnbull’s recent appointment as Prime Minister has reignited market speculation the federal government’s attitude may have softened on approving a revised ADM takeover, amid a more favourable appetite towards foreign investment.
Mr Truss told Fairfax Agricultural Media he was not aware of any new bid by ADM to takeover GrainCorp but stressed the US grains giant was restricted by former Treasurer Joe Hockey’s decision to only allow 24.9 per cent ownership of GrainCorp, “and that decision stands”.
“I doubt that ADM has done anything since that time to improve its standing with Australian farmers,” Mr Truss said.
“The level of foreign ownership of Australia's farmland and agribusiness has continued to increase.
“If there were to be another takeover bid I would expect it to be subject to detailed scrutiny by all relevant Australian regulatory agencies.”
NSW Liberal Senator Bill Heffernan agreed nothing had changed to alter the underlying market dynamics and competition concerns which he vigorously attacked during a heated federal Senate inquiry into the original ADM proposal.
An interim report released by the Senate Rural and Regional Affairs and Transport References Committee in mid-2013 urged the Australian Competition and Consumer Commission (ACCC) to re-examine its non-opposition to the GrainCorp acquisition.
At the time, the ACCC said the deal was “unlikely to substantially lessen competition as the merged entity would continue to face competition from a number of sources”.
But the Senate committee expressed concerns the ACCC didn’t have the “necessary expertise” to undertake a full and proper review and failed to obtain independent expert advice or assistance during the original examination.
The Senate inquiry expressed concerns at the ACCC’s inability to conduct rigorous analysis of ADM's 80 per cent shareholding in Toepfer and its potential to shrink competition in the domestic grains market.
“If the takeover is successful, a foreign company stands to own and control seven-eighths of Australia's east coast grain handling infrastructure,” the report said.
Some sectors of the business community were angered by Mr Hockey’s ADM rejection which also ignited stinging criticism of the Abbott government’s mixed attitude on foreign investment, by the ALP.
But farm groups praised the former Treasurer’s stance and welcomed Senator Heffernan’s staunch opposition to the sale due to shared concerns about surrendering control of key strategic port assets, to a foreign multinational.
'Nothing has changed'
This week, Senator Heffernan said he was unaware of Mr Turnbull’s position on ADM potentially taking another “crack” at GrainCorp.
But he stressed any new proposal would face “full scrutiny” including by the Foreign Investment Review Board (FIRB), ACCC and federal cabinet.
As was the case with the first bid, the FIRB would need to submit its view on the proposed takeover to the Federal Treasurer - now Scott Morrison – for his consideration, in making a final decision.
“It does not surprise me ADM want to have another crack at GrainCorp,” the veteran Senator and Junee sheep and grain farmer said.
“But nothing has changed in terms of any potentially ‘improper’ consolidation of the east coast grains market and ADM being, what I’d describe as ‘interesting corporate citizens’.
“If they were to put another proposal on the table, I would be calling for another Senate inquiry to see what’s changed.
“In my view, any offer would have to go through the whole process again.”
Senator Heffernan said ADM had a history of tax-avoidance and along with Wilmar, of which it has a minority share-holding, had a proven reputation for “controlling markets to benefit themselves”.
“I told ADM last time that if they came back to have another crack at GrainCorp I’d be waiting for them at the end of the laneway,” he said.
“If they’re thinking of putting their head up again, we’d better have a good chat about it.
“The east coast grains market is a monopoly set-up with regional monopolies at the up-country storages.
“It’s too monopolistic and the small players can’t get into the market as it is now.”
NSW National Party Senator Fiona Nash backed Senator Heffernan during the Senate inquiry, in raising concerns about ADM’s credentials and supply chain impacts of the takeover, especially around lack of competition at up-country storage facilities.
This week, Senator Nash said her views on the issue remain unchanged and she “fully supported” calls for a full re-examination and tough scrutiny, of any new ADM offer.
“My deep and significant concerns still remain,” the Young-based grain farmer said.
“I would like to think ADM is not coming forward again with another offer on GrainCorp just because we have a new Treasurer now, but because there’s a significant change of circumstances in their offer.
“ADM’s last proposal was rejected and unless significant circumstances have changed, I see no reason for approving any new offer now.”
ADM made a failed last minute pitch to rescue the GrainCorp deal in 2013 by offering to invest $250 million in the grain handling and storage network which they have since moved to rationalise, with 80pc of grain received at just 100 sites, out of 280.
At the time of rejecting the ADM bid, Mr Hockey said he would allow ADM to increase its shareholding in GrainCorp from 19.85 per cent to 24.9pc.
Mr Truss and the Nationals opposed the GrainCorp takeover – in supporting the views of the majority of grains industry groups - saying handing over control of key port assets on the east coast was against the national interest; a key criteria of the FIRB’s considerations.
However, the Coalition has since bolstered the ACCC’s capacity – and the FIRB - to assess agricultural supply chain competition issues, like the potential GrainCorp takeover.
The competition watch-dog was granted $11.4m in the Agricultural Competitiveness White Paper released mid-year to implement an Agricultural Commissioner and Engagement Unit, to assess supply chain competition issues.