Australia’s largest grain company has been formed by the takeover of AWB by larger rival GrainCorp.
The move is seen as an attempt to fend off domination of Australian grain trading by large international companies such as Glencore, Cargill, Bunge and Louis Dreyfus.
Quoted in the Sydney Morning Herald, AWB managing director Gordon Davis said the merged entity’s size would enhance its ability to compete ”rather than being being picked off by some very, very large overseas companies.”
”This is long overdue,” Mr Davis said. ”We have been trying to find productive ways to get structural rationalization in the Australian market for some time.”
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AWB formerly the Australian Wheat Board, lost its export wheat monopoly in 2008 following a scandal involving kickback payments to secure sales to Iraq. It has since been struggling to maintain market share.
Under the all-share deal valued at A$855 million (C$796 million), AWB shareholders will get one GrainCorp share for every 5.75 AWB shares, valuing each share at A$1.047.
Based on last year’s handlings, the new company would handle 14.6 million tonnes per year. ABB Ltd, acquired last year by Canada’s Viterra, is expected to handle 6.5 to seven million tonnes this year.
