MARKETS SPECTATOR: Graincorp acquisition trigger

Archer Daniels Midland's impending takeover of Graincorp could be the beginning of a wave of consolidation in Australia's food sector.

GrainCorp’s acceptance of Archer Daniels Midland’s $13.20 a share offer ($12.20 plus a $1 dividend) today puts the US company in a dominant market position in Australian grain handling. GrainCorp manages 75 per cent of eastern Australia’s annual grain production and 90 per cent of eastern Australia’s bulk grain exports. It produces 35 per cent of Australia’s flour and 40 per cent of the country’s canola oil. Not a bad deal for Archer Daniels Midland, which if nothing else likes to dominate a market. Being a chief executive of an Australian food company now means it is likely an interested buyer will call.

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