The great GrainCorp gaffe. What about the price?

The national interest debate over the sale of Graincorp misses an essential point. The weaker currency is making the company cheap.

There’s a forgotten element in the growing furore over the future of GrainCorp. And that’s the price.

As debate gathers momentum about the potential dangers to the national interest of Archer Daniels Midland’s $3 billion GrainCorp takeover, everyone appears to have forgotten that shareholders are in the process of being fleeced.

After months of stalking Australia’s biggest grain haulage and storage group, the Americans finally got the nod on their slightly sweetened $3 billion takeover in April (see Tom Elliott's Selling GrainCorp into a sweeter bid).

Since then of course, the Australian dollar has fallen about 12%. And as each day passes, and the currency differential widens, so too does the smile on those running ADM.

From the American perspective, GrainCorp is getting cheaper by the day. And for as long as the politicians keep tearing each other apart over whether to block the deal, thereby delaying its completion, the American buyers couldn’t be happier.

The transaction already has the approval of the competition regulator and now merely needs the nod from the Foreign Investment Review Board.

The idea of knocking it back on national interest grounds seems ludicrous. Australia welcomes foreign investment, even from state-owned corporations from non-democratic countries such as China. ADM hardly fits that bill.

And there was precious little of this jingoistic noise when AWB was bought or ABB for that matter.

The final say on whether the company should be sold should rest with GrainCorp shareholders. And on that score, they would be well within their rights to order their board either to renegotiate the price or call the whole thing off.

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