Key Points:
Access to capital and foreign markets, class actions and possible market concentration are all major issues in agribusiness at the moment.
We highlight below some of the more notable recent developments which caught our eye in the agribusiness sector over the past few weeks.
Further scrutiny of ADM bid for GrainCorp
The Senate's Rural and Regional Affairs and Transport References Committee has recommended the ACCC reopen its informal review of Archer Daniels Midland's proposed acquisition of GrainCorp in its report on Ownership arrangements of grain handling.
The Committee's chair, NSW Senator Bill Heffernan, said the ACCC needs to take a closer look at the transaction, and in particular, the effect it would have on competition in Australia.
Archer Daniels Midland has acquired almost 26% of GrainCorp's shares (as of 20 August) after launching its $13.20 takeover offer in May. A condition precedent to the deal is a 50.1% shareholder acceptance, however the company has previously indicated that it wants full control. Following delays in obtaining FIRB approval, ADM has now extended its deadline to 7pm on 16 November.
Source: ABC News Online; Business Spectator
Will the Nationals veto an FTA with China?
Trade experts are warning that the Abbott Government's trade negotiations with China could be affected by Barnaby Joyce's campaign against increased Chinese investment in Australia. Leading company directors from Transurban, CSL, Perpetual, NAB and Nestle have warned that the high cost of doing business in Australia and a recent uptick in xenophobic rhetoric are jeopardizing our access to foreign capital.
Source: Australian Financial Review, August 24, 2013
Abalone industry impacted by virus: $82 million class action
Maurice Blackburn is acting on behalf of 10 abalone licence holders who are seeking $82 million in damages after a lethal virus wiped out one third of Australia's abalone industry. The applicants claim that the Victorian Government failed to control the outbreak after being told about infected abalone farms. The crisis has devastated abalone stocks in Victoria, and has been dubbed "the foot-and-mouth" of the abalone industry.
Source: The Canberra Times, August 19, 2013
"Milking" the Fonterra scandal
Australian Dairy Farmers president Noel Campbell has urged the Federal Government to take advantage of New Zealand's dairy woes by making a free trade agreement with China. He said "there is significant work being done in that space at the moment, so we are hopeful of what might come out of it. But this Fonterra thing has given us increased impetus, there's no doubt about that." In 2011-12 Australia exported $389 million worth of dairy products to China, compared to New Zealand's NZ$2.1 billion ($1.85 billion).
Source: The Canberra Times, August 19, 2013
Challenges for agribusiness lending
Following recent comments from former ASIC chairman Tony D'Aloisio about the poor state of Australian agribusiness lending, Murray Goulburn Co-operative general manager Robert Poole has said that foreign capital would replace its domestic counterpart if Australian banks don't step up to the plate. He said that "a lot of the banks are still funding agriculture like they did in the 1950s and 60s, with 50 per cent equity and mums and dads borrowing money ... that is, I think, going to rapidly change and I think the banks are going to be involved in that or they are not. Because the external capital is inevitably going to come".
Source: The Australian, August 21, 2013
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.
