GrainCorp syndicate withdraws from CBH bid

20 Sep, 2016 06:10 AM
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GrainCorp's plans to support corporatisation of West Australia's Co-operative Bulk Handling have been scuttled because of inadequate grower support for Australian Grains Champion in WA.
GrainCorp's plans to support corporatisation of West Australia's Co-operative Bulk Handling have been scuttled because of inadequate grower support for Australian Grains Champion in WA.

Big West Australian grain business Co-operative Bulk Handling (CBH) has greeted news of the collapsing bid to commercialise the $2.5 billion co-op with an off-hand acknowledgment.

GrainCorp has pulled out of the Australian Grains Champion (AGC) partnership, which announced yesterday it was withdrawing its proposal to commercialise CBH as a listed company.

The eastern states grain giant confirmed to the Australian Securities Exchange (ASX) it and consortium partners, including First State Super, would respect the AGC decision.

The eight-month AGC campaign was initiated by a number of prominent WA growers, but was poorly supported by most of the WA co-op’s 4100-grower membership.

In particularly CBH directors rejected the proposal saying it threatened to deliver rival GrainCorp a strategic “blocking stake” in the WA business.

CBH chairman Wally Newman said three quarters of growers had wholeheartedly supported the board’s decision to reject the AGC offer back in March.

He simply “acknowledged” the latest news from GrainCorp and its consortium to conclude their agreement with AGC.

GrainCorp managing director, Mark Palmquist said while he felt the AGC proposal was unique and attractive to CBH, the cornerstone backing arrangement always left any decision on the AGC deal to WA growers.

Mr Palmquist said it was now “appropriate to afford WA growers time and space” to address important issues about CBH’s future and their own business priorities.

“CBH is conducting its own review of its structure and governance which will take some time to finalise,” he said.

“At the same time growers are working to ensure their farm businesses are prepared for what is shaping up to be a historically large harvest.”

GrainCorp remained open to considering opportunities “to support the growth and transformation of Australian agriculture”.

AGC was formed by a rebel farmer group in January with the aim of giving co-op grower members the chance to sell their shares into a company which was then to be listed via public offering.

CBH was estimated to be worth almost $2.6b as a listed entity, according recent analysis by Perth investment firm Paterson Securities.

?However, chairman, Mr Newman, said directors unanimously believed the proposal did not represent value for WA graingrowers and welcomed AGC’s withdrawal.

“We surveyed our members and they were very clear - 78 per cent supported the board’s rejection of the proposal,” he said.

“We are currently working in close consultation with our members, undertaking a structure and governance review and implementing a number of strategic programs.

“These include the network strategy, new services for harvest, the expansion of Interflour and Blue Lake Milling establishing a facility here in Western Australia.”

Grower meetings in the past three weeks were being followed up with a membership survey to gauge the preferences of growers on a number of structure and governance options.

“This is central to the way we run our business, informing and focusing on growers, and ensuring we understand what is important to them,” Mr Newman said.

“We will then be back to communicate directly with growers on the next steps, as well as focusing now on receiving, moving and exporting the coming harvest.”

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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READER COMMENTS

Interested Party
27/09/2016 9:22:25 AM

I've said this before but if farmers are not happy with their CBH Board they should put up or shut up after all it's the farmers who have the vote. Instead of bleating nominate for a position on the board and do your bit to make a change!
Deregul8
27/09/2016 12:39:24 PM

I couldn't think of anything more painful or fruitless than sitting on a board that does not embrace the principles of Austrian economics. Politics is no place for a multibillion dollar company facing real free market economic threats. At the moment, politics is thick in this organization.
Jock Munro
27/09/2016 6:53:42 PM

You had better check your sources ATB!
Interested Party
28/09/2016 9:27:18 AM

Deregul8 as I said stop bleating and do something about it or leave it to those who seem to care!
Jock Munro
28/09/2016 10:47:31 AM

Deregular, Most would rejoice at the opportunity to sit on the CBH Board and especially committed grain growers. What an outfit that it has proven to be. Our system in the East has been virtually destroyed by a corporate ethos- CBH reportedly saw GrainCorp as a 'train wreck'and not a good purchase.
LTF
29/09/2016 10:28:50 AM

D8, what's Austria got to do with CBH? Anyone naïve enough to think that politics is not deeply engraved into the wheat/grain industry world wide should not show their ignorance here. The worlds biggest exporter subsidises agricultural producers in the billions of dollars. Yes that is the so called bastion of free trade, the USA. CBH has nothing on the rest of the fake free trade when it comes to politics.
longliveag
2/10/2016 5:12:57 AM

Can anyone tell what the vision is for this great Co-op?? Then we will know if it is performing. Let's bench mark our costs against Bunge as they are the real competitors and not what is happening in the East.
Consolidated
7/10/2016 12:23:24 PM

No doubt a few frosted Freddies out there who will wish they had taken a closer look at the AGC offer once the harvest is complete & farmers start looking to spend on next year's crop. That is of course, provided banks extend that credit which in any case will not come cheap if it comes at all. You never take your financial security for granted in this world. Sad to see the greatest enemy of the family farm is the farmer himself with ignorance and complacency. Some cheap land on the horizon ...
ATB
11/10/2016 11:28:37 AM

Sorry did i get it wrong..? Rankins Springs is still open..?!
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