March 5, 2019

Australia’s largest listed crop handler, GrainCorp Limited, announced it has agreed to sell its Australian Bulk Liquid Terminals (ABLT) business to ANZ Terminals Pty Ltd. in a deal valued at A$350 million (US$248 million).

Included in the deal are eight sites for the storing and handling liquid fats and oil, fuels, and chemicals located across Australia with a combined storage capacity of 211,000 cubic meters.

Originally acquired by GrainCorp in 2012 as part of its deal to acquire the edible oils business Gardner Smith, the sale of the assets is part of GrainCorp’s strategic business review announced in December 2018.

“Since we acquired the assets in 2012, the Australian Bulk Liquid Terminals business mix has evolved substantially and is increasingly serving other sectors, in addition to the edible oils commodities that are more closely aligned with GrainCorp’s core business,” said Mark Palmquist, managing director and CEO, GrainCorp.

At the same time, GrainCorp began reviewing a potential takeover bid of A$2.38 billion (US$1.8 billion) put forth by Long Term Asset Partners (LTAP).

Newly formed and backed by Goldman Sachs Group, LTAP has been launched as an asset manager for a trust benefiting Australian investors. It is headed by former president of the Business Council of Australia, Tony Shepherd, and by former CEO of rail freight company Aurizon Holdings Ltd., Lance Hockridge, along with directors Andrea Stains and Chris Craddock, and former ADM executive director and GrainCorp general manager of ports, Nigel Hart.

GrainCorp assured that it will consider the offer, undertaking a period of conditional due diligence to answer various questions regarding LTAP’s backers, the financial structure of the deal, and its adherence to Australian regulatory requirements as it conducts an ongoing Portfolio Review.

“The timing of the offer is opportunistic,” Belinda Moore, equity analyst with RBS Morgans, told Reuters in December. “With the next opportunity for GrainCorp to possibly benefit from materially improved conditions not until 2021, shareholders will likely see this offer as attractive.”

ANZ

ANZ Terminals, the buyer of the GrainCorp’s ABLT assets, owns and operates a total of nine terminals – five in Australia, and four in New Zealand, with a combined capacity of 375,000 cubic meters.

Its backers include multiple fund managers and institutional investors including Palisade Investment Partners – which holds a 32 percent stake through its Diversified Infrastructure Trust – and two unidentified direct mandates, according to Infrastructure Investor. Additional backers include Global First State Global Asset Management, which holds a 23 percent stake, and Northleaf Capital Partners and Fengate Capital, two Canadian fund managers.

“This acquisition expands our footprint across the Australian bulk liquid terminals market, including key sites in Queensland and Victoria and opens up new geographies for us in Western Australia and Tasmania,” said Nick Moen, chief executive of ANZ Terminals.

As part of the deal, GrainCorp is entering into a long-term storage agreement with ANZ Terminals.

“ANZ Terminals is an established and respected bulk liquid terminals operator,” said Sam Tainsh, general manager of GrainCorp Oils group.  “We will work with ANZ Terminals to ensure a smooth transition for our customers and our people and through the long-term storage agreement we will have the access required for our trading and liquid feeds businesses.”  

The deal with ANZ is subject to various conditions, including GrainCorp not entering into a change of control or material alternative transaction before May 10 – in effect, giving LTAP until that date to finalize its potential takeover offer.

“There’s no certainty that LTAP will make a binding proposal for the company or what the terms of any such proposal would be,” said Graham Bradley, chairman, GrainCorp.

-Lynda Kiernan