Australian terminal deal passes major regulatory hurdle

The deal is a precursor to a ‘demerger’ of GrainCorp’s malt division

Reuters – Two of Australia’s largest grain handlers are one important step closer to a key asset sale.

GrainCorp passed a major regulatory hurdle November 15 to sell its Australian bulk liquid terminals business to ANZ Terminals, propelling its shares around eight per cent higher.

The clearance from the Australian Competition and Consumer Commission (ACCC) comes a day after GrainCorp posted its biggest annual loss in more than two decades. It had also warned of a weaker crop outlook in 2020 as it battles a three-year drought that has wilted its output.

The ACCC said it would not oppose the acquisition after ANZ Terminals agreed to divest its Osborne facility in south Australia, and GrainCorp agreed to retain its bulk liquid facility at Port Kembla in New South Wales.

The watchdog had extended its review on the sale by several months after expressing concerns about market concentration.

GrainCorp said the purchase price for the terminals would fall by A$18 million (C$16.2 million) from the original A$350 million (C$315 million) as it retained the Port Kembla facility.

Shares jumped as much as 8.4 per cent to mark their best day in nearly a year, with analysts saying that the ACCC’s decision puts GrainCorp one step closer towards completing a demerger of its malt division from its core grain business.

“Passing the regulatory hurdle does allow the demerger of the malt division, which is what the market wants,” Damian Rooney, director of equity sales at Argonaut said.

“The company has put forth the vision that the demerger is better for the business, and it can then focus on individual elements. This is one step in the right direction.”

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