Sydney | Reuters — Australia’s GrainCorp said Wednesday it was joining a consortium that plans to acquire, then list, Western Australia’s grower-owned Co-operative Bulk Handling Ltd (CBH), the country’s largest wheat exporter.
The proposal is led by Australian Grains Champion, a Western Australian grower-led initiative. The acquisition would be valued at A$3 billion (C$2.96 billion), the Australian Financial Review reported.
GrainCorp said it will be a cornerstone investor.
“Our proposed investment is a good strategic fit for GrainCorp, bearing in mind CBH’s complementary assets and capabilities,” said Mark Palmquist, GrainCorp’s managing director and CEO.
“Importantly, the decision to proceed is ultimately one for Western Australian growers and we respect that process.”
As part of the proposal, the consortium said it would provide CBH grower members A$600 million (C$592 million) as an incentive should they agree to list CBH.
Australia is the world’s fourth-largest exporter, selling just shy of 19 million tonnes of the grain this season to markets in Asia.
Western Australia is the country’s largest grain-producing region, accounting for more than a third of all production.
In contrast, the east coast, where GrainCorp enjoys market dominance, has seen production of wheat stunted by adverse weather, limiting exports and slowing revenues.
GrainCorp said in November that financial year net profit fell 36.2 per cent to A$32.1 million.
— Reporting for Reuters by Ian Chua in Sydney.