The cost of blocking ADM

30 Nov, 2013 01:00 AM

GRAINCORP'S biggest individual shareholder has applauded the federal government's decision to block the controversial GrainCorp sale, but the Australian Shareholders Association claims political interference has cost investors close to $1 billion.

Shareholders association spokesman Stephen Mayne said while investors recognised the sensitivity of GrainCorp's influential position as the dominant eastern Australian port and grain handling network operator, they would struggle to see how halting the sale was justified.

The $650 million slide in the value of GrainCorp's market capitalisation was justification enough to question the wisdom of federal Treasurer Joe Hockey's decision, Mr Mayne said.

He said given the extent of other overseas grain sector investments and takeovers allowed in Australian sector businesses in recent years, it was extraordinary GrainCorp's sale had not at least been given the green light with some regulatory conditions attached.

But Don Seaton, who holds about 2.2 per cent of GrainCorp's shares was far from disappointed that his warnings about the danger of an ADM takeover had been noted.

"I am very pleased by the Treasurer's decision," he said.

"The decision recognises that while foreign investment is immensely beneficial to Australia, this country needs a sound national strategy to govern foreign sourced investment in its agriculture sector.

"We need a strategy that fosters competition, preserves local industry and delivers long-term benefits to Australian farmers."

Mr Seaton stand against the ADM takeover on national interest grounds was made despite his personally being in the running to collect $30 million from the ADM offer.

As a former owner of the Gardner Smith grain trading and processing company, which was bought by GrainCorp last year, his opposition to the ADM takeover was based on a lifetime of commitment to the farm sector and a deep understanding of the market issues at stake.

"Australia is in the envious position of being the last piece in the global grain puzzle for foreign agribusiness companies," he said.

"The next step is to put in place industry-wide structural safeguards to ensure that future approaches by foreign agribusiness may be welcomed without the threat of damage to competition in our local industries."

"Today's economically sophisticated decision by the Treasurer allowing ADM to increase its stake in GrainCorp without a full takeover provides an opportunity for us to consider appropriate reforms to unlock the competition constraints in the agriculture sector."

But according to Mr Mayne while foreign ownership has never been politically popular in Australia, the nation had long relied on overseas capital to fund its agricultural sector growth.

"Now there are also 16,000 shareholders who have been penalised by the decision and the government has lost tens of millions in capital gains tax earnings because the sale won't go through."

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Interested observer
30/11/2013 1:55:04 AM

Stephen Mayne needs to check the share register - it was short term traders not investors. Dominant players were NAB and Credit Suisse and NAB was in and out like a yoyo. They choose to trade then they carry the risk of trading. The sharp reduction in the market capitalisation is merely a flushing of the traders and a return to a more stable value range. Try looking at it this way Stephen, the yield (%) has improved as a result. Don Seaton would be considered an investor. GrainCorp needs to seriously rethink its strategy and it has awesome insight on its Board to help, David Trebeck.
30/11/2013 5:29:36 AM

Congratulations Don Seaton. It is rare that a shareholder puts principle ahead of profit. Investors and speculators will be annoyed, but Joe Hockey has put wheat growers interests first. Well done.
mark hoskinson
30/11/2013 6:08:55 AM

All the Armchair experts are out showing their ignorance of who would have been the looser to ADM the East Coast Grain grower. ADM has a proven dark history manipulating and dodgy dealings for years and all these so called Armchair experts including Mayne and John Snooke would not loose one cent from this but we growers would be thrown to the mercy of a huge ruthless US Giant company with their profits before everyone else. This has been a long process with influence and pressure coming from especially the US to weaken their biggest threat the Australian Grain grower. I welcome common sense.
30/11/2013 7:37:52 AM

Foreign investment in Australia is good but foreign ownership and control is not. Foreign ownership means decisions will be made in interest of overseas shareholders & our competitors and not necessarily in the interest of the Australian economy.
30/11/2013 9:22:32 AM

Well said Don Seaton. I like the way this new government is handling matters. May they be successful as it will help restore business confidence. Not all decisions need to be popular. Populism generally ends badly for all.
Love the country
30/11/2013 4:40:29 PM

Don't worry about greedy investors, worry about farmers, there isn't many left !
30/11/2013 7:31:02 PM

If ADM were could see a commercial case to inject capitol into Graincorp as a business, why cannot Graincorp kust borrow the money like evertbody eles in Business? The answer is they can, ADM could see that if you own a whole link in the chain you control the whole chain.
1/12/2013 7:25:49 PM

Stephen Mayne, I think you will find the drop in GrainCorps share price was about equal to the rise associated with the ADM bid to buy GC. In other words, the share price has not really changed. It was just that ADM was offering a $3-4 premium (to buy a monopoly) for which it never had permission.So there was never any real slide in GC share value, just a bet that there might be. A bet that was lost. That is the risk punters take is it not? So don't blame Mr Hockey. He is about the most gutsy Treasurer we have had in a long time.
2/12/2013 8:05:32 AM

A defeat for the wicked merchant! The Green politician Adam Bandt was right with his statement that food should be free.
Amused observer
2/12/2013 1:42:19 PM

LTF, "gutsy" are you calling our Treasurer porky?
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