Forrest backs Hockey move on grain deal
Speaking after the second Australia-China Senior Business Leaders' Forum, which was set up in April to bring business leaders together, Mr Forrest told BusinessDay the GrainCorp decision sent a powerful message to China and other countries that Australia acted independently when it came to matters of national interest.
He said Australia's record of allowing foreign takeovers was near-perfect. Of the 130 applications that have come to the Treasurer's desk since the federal election in September, GrainCorp is the only one that has been declined.
He said the issue of GrainCorp was one of a number of topics discussed at the business leaders' forum, held in Sydney on Saturday. It followed a dinner with Prime Minister Tony Abbott on Friday night.
Guests at the forum included Frank Lowy, Seven chairman Kerry Stokes, Macquarie boss Nicholas Moore, Business Council of Australia chairman Tony Shepherd, Li Ruogu, the chairman and president of Import-Export Bank of China, Chang Zhenming, chairman of CITIC Group Corporation, Wang Boming, president of the Stock Exchange executive council and editor-in-chief of Caijing magazine and Cao Huiquan, chairman of Hunan Valin Iron & Steel Group Company.
GrainCorp shares lost almost a quarter of their value after Mr Hockey said on Friday that the US grain trader's $3.4 billion takeover proposal was contrary to the national interest.
The decision to block the investment drew criticism from the Business Council that it risked undermining Mr Abbott's election-night pledge that Australia was open for business.
Still, Mr Forrest said the Treasurer's decision to block the takeover by the US food behemoth would not have been an easy one but it sent a message that Australia would block a takeover if it was not in the national interest, despite its friendship with the US.
"This is an empowering act to reinforce that we act independently," Mr Forrest said.
"In the case of GrainCorp, the decision was necessary given the concentration of power in a near monopoly situation.
"The upshot is whenever you have got such concentration of market power there, consideration needs to be given to more than one set of stakeholders, the shareholders."
GrainCorp handles 75 per cent of eastern Australia's grain crop and 90 per cent of its bulk grain exports.
The company supplies 35 per cent of eastern Australia's grain to international buyers and 25 per cent to domestic consumers.
Other topics of discussion at the Australia-China Senior Business Leaders' Forum included the Foreign Investment Review Board, the free-trade agreement between Australia and China and the 3rd Plenum Decision, which promises far-reaching economic reform policies including opening the door to greater foreign participation in China's services sector.
Mr Forrest said the meeting reaffirmed the importance of building long-term relations based on "trust", "transparency and mutual benefit".
Frequently Asked Questions about this Article…
Andrew Forrest supported Joe Hockey's decision to block the foreign takeover of GrainCorp because he believed it was an empowering act necessary to address the near monopoly status of Australia's largest agribusiness. He felt it was important for Australia to act independently in matters of national interest.
Following Joe Hockey's announcement to block the $3.4 billion takeover proposal of GrainCorp, the company's shares lost almost a quarter of their value.
GrainCorp handles 75% of eastern Australia's grain crop and 90% of its bulk grain exports, which gives it a significant concentration of market power. This near monopoly situation was a key factor in the decision to block the takeover, as it required consideration beyond just shareholder interests.
The decision to block the GrainCorp takeover sent a powerful message to international investors, including China, that Australia acts independently and prioritizes national interest in foreign investment decisions.
The Business Council criticized the decision to block the GrainCorp takeover, expressing concerns that it could undermine Prime Minister Tony Abbott's election-night pledge that Australia was open for business.
The forum discussed various topics, including the Foreign Investment Review Board, the free-trade agreement between Australia and China, and the 3rd Plenum Decision, which promises economic reforms and greater foreign participation in China's services sector.
GrainCorp supplies 35% of eastern Australia's grain to international buyers and 25% to domestic consumers, playing a crucial role in the country's grain supply chain.
Andrew Forrest emphasized the importance of building long-term relations with China based on trust, transparency, and mutual benefit, as reaffirmed during the Australia-China Senior Business Leaders' Forum.
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