Australia’s largest farmer co-op, the Cooperative Bulk Handling (CBH) group, has rejected a takeover proposal from a consortium that would have seen the co-op transformed into a more commercial and corporate entity. CBH, which is owned by 4,200 grain farmers, is based in Western Australia and has operations all along the grain supply chain including the storage, handling, processing, transport and marketing of grain.

The board of CBH rejected the takeover proposal, which is thought to be worth up to A$3bn (€2bn), saying the deal “offered no long-term value” and would ultimately result in “increased fees and charges for growers”.

The takeover offer was made by Australian Grains Champion, a consortium of large-scale grain farmers based in Western Australia, and GrainCorp, the listed grain trader based in eastern Australia. The board of CBH also said it blocked the deal as it felt it gave GrainCorp too great a strategic stake in the business at a “discount rather than a premium”.

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Unsurprised

The Australian Grains Champion consortium said it was not “the least bit surprised” by the decision.

“At no stage has the CBH board sought to engage in a discussion about the merits of the proposal and so this was always going to be a disappointing but entirely predictable outcome,” it added.

The reality for CBH is that many of its farmer members want a change in the current business structure of the co-operative and the group said it is prepared to engage with members on this.

CBH chairman Wally Newman said the board would consider how best to structure CBH for the future, but also pointed out the company had “received several enquiries from other interested parties”.

While any other potential suitors were not named, local media reports suggested that CHS, an American grain farmer co-op, had contacted CBH with a view to a possible deal.