ACCC clears Graincorp-ANZ Terminals deal with conditions

Undertakings by ANZ Terminals to divest a facility in South Australia and to exclude a facility at Port Kembla from the deal alleviates competition concerns, the competition watchdog said.

The Australian Competition and Consumer Commission will not oppose the sale of Graincorp’s Australian Bulk Liquid Terminals division to ANZ Terminals, an entity owned by a group of private infrastructure investors.

The ACCC approved the sale with conditions: ANZ Terminals must provide a court-enforceable undertaking to divest the Osborne facility in South Australia to a buyer approved by the ACCC and must seek clearance from the ACCC ahead of any future land acquisitions at Coode Island, Melbourne. In addition, the bulk liquid facility at Port Kembla in New South Wales has been excluded from the transaction and will remain with Graincorp.

“The divestment of the Osborne facility and exclusion of the Port Kembla facility alleviate our competition concerns in NSW and SA, as the competitive structure in these markets will be maintained,” ACCC commissioner Stephen Ridgeway said in a statement.

The ACCC also found that ANZ Terminals had no options to expand easily on Coode Island, while others in the market had easier options to expand.

Graincorp announced the sale in March 2019 for a total enterprise value of approximately A$350 million ($238 million; €216 million). With Port Kembla excluded from the transaction, the value of the deal will fall by A$18 million.

Buyer ANZ Terminals is itself an independent owner and operator of bulk liquid storage facilities in Australia and New Zealand. Its initial offer represented a multiple of approximately 13 times the subsidiary’s expected fiscal year 2019 EBITDA.

ANZ Terminals counts several infrastructure fund managers and institutional investors among its shareholders. Palisade Investment Partners manages a 32 percent equity stake in ANZ Terminals on behalf of its open-ended Diversified Infrastructure Trust and two unidentified direct mandates, according to a statement made upon acquiring the stake in November 2014.

First Sentier Investors also holds a stake in ANZ Terminals of around 23 percent via its Global Diversified Infrastructure Trust, while Canadian managers Northleaf Capital Partners and Fengate Capital are also known to be shareholders. All acquired their stakes from Macquarie Group in late 2014, with Macquarie Capital then retaining a stake of around 10 percent.

Graincorp chief executive Mark Palmquist described the announcement as a “significant step” towards completing the sale of its bulk liquid terminals. It is expected that Graincorp will now push ahead with a planned demerger of its malt business.

The deal is still subject to Foreign Investment Review Board approval but Graincorp said it expects the deal will close on or around December 31, 2019.

Graincorp yesterday announced that underlying EBITDA in FY19 had fallen to A$69 million from A$269 million a year earlier, with the company posting an underlying net loss after tax of A$82 million, down from a net profit of A$71 million last year.

The firm said it had been “adversely affected by one of the worst droughts on record in eastern Australia, compounded by significant disruptions in global grain markets.”