Australia clears Agrium to shed AWB grain business

Fertilizer and ag retail giant Agrium has the blessing of Australia’s foreign-investment watchdogs to sell the former Australian Wheat Board’s grain handling business to Cargill.

Calgary-based Agrium and Minneapolis-based Cargill confirmed Wednesday the sale of the AWB Commodity Management business will raise no objections from Australia’s Foreign Investment Review Board (FIRB).

The deal also earned a lack of objection in March from the Australian Competition and Consumer Commission.

“We will now proceed rapidly to conclude the transaction and begin the integration process to bring the two businesses together,” Cargill Australia’s managing director Ralph Selwood said in a release.

Specifically, he said, Cargill plans to:

  • continue to operate wheat and barley pools over the coming years “while there is a commercial demand for pool products;”
  • “actively use” the AWB brand in its grain buying and grower activities and anywhere the brand can help secure premium pricing in international markets;
  • use and promote Australian wheat classification “as a means of distinguishing the high quality of Australian wheat;”
  • allow open access to other grain buyers at AWB storage sites “within normal commercial requirements;” and
  • promote “pricing transparency” via its web site and offer prices for delivery at AWB’s 22 Grainflow bulk cereal grain storage centres, found in South Australia and up Australia’s east coast.

“Expertise”

For its part, the deal will allow Agrium “to focus our efforts in Australia on what we do best, bringing value to our grower customers through our retail Landmark business,” Agrium CEO Mike Wilson said in a separate release.

“Likewise, we believe Australian grain growers will further benefit from Cargill’s expertise in grain handling and international marketing.”

Agrium and Cargill entered talks in December last year to sell AWB’s grain business, which Agrium formally acquired earlier that month as part of its C$1.16 billion takeover of AWB.

Agrium had long said its main interest in Melbourne-based AWB was the Landmark Rural Services arm, Australia’s biggest distributor of ag inputs, with over 400 locations in Australia and New Zealand.

AWB’s Commodity Management arm includes its grain merchandising, pool management, storage and handling and trade finance operations.

Grain marketing, pool management and logistics in Australia are part of AWB’s Australian Commodity Management business, while its international activities, run through AWB’s offices in Switzerland and India, fall under International Commodity Management.

AWB for over 60 years was Australia’s statutory grain marketing agency, but its grain market muscle there has weakened since 2008, when it lost its wheat export monopoly powers in the wake of a scandal over kickbacks to secure sales to Iraq during the late Saddam Hussein’s regime.

AWB last summer made a deal to sell itself to Sydney-based bulk handler GrainCorp, but dropped it when Agrium stepped forward with a higher bid.

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