Co-operative Bulk Handling Ltd. (CBH), the largest wheat exporter in Australia, announced it has rejected an A$3 billion (US$2.2 billion) takeover bid including plans to take the co-op public, put forth by the GrainCorp-backed Australian Grains Champion (AGC), according to Reuters.
CBH’s board, which unanimously rejected the proposal, qualified its decision stating that the deal would give too much power to GrainCorp and would be detrimental to value for CBH’s 4,200 grower-members and their network.
“After careful consideration the board has today written to AGC advising that we reject the proposal and will not enter into AGC’s process agreement,” Newman said, reports World Grain. “This unsolicited bid would see Western Australian grain growers lose control of CBH’s strategic supply chain and GrainCorp acquire a strategic stake in CBH at a discount rather than a premium,” adding that the deal would result in higher fees and charges for growers.
The proposed AGC takeover could still have a chance of occurring if the consortium can successfully arrange a meeting with CBH’s members - however, it would need to gain support from a minimum 10% of the co-ops member to call such a meeting. AGC director, Brad Jones told the Sidney Morning Herald that AGC will continue to talk with CBH growers to see that the growers rather than the board have the opportunity to measure the merits of the deal.
CBH plans to conduct more than 20 meetings with its growers within the next six weeks to review and determine the best course of action for restructuring the business for the greatest future return. In 2010, the co-op undertook a similar review process at the cost of $3 million, when investors in support of privatization unsuccessfully attempted to secure a majority of seats on the board.
CBH states it is planning to report back to its growers with a possible three or four different structures by September 30. The review process will also address “several inquiries from other interested parties beyond AGC”, according to CBH managing director, Andy Crane, reports the Sidney Morning Herald.
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