Australia’s AWB and ABB Grain call off merger talks
18 Dec 2008
A merger that would have created Australia's largest grain shipper ended in failure yesterday with AWB and ABB Grain unable to reach an amicable commercial agreement.
Australian media reports suggest that some directors of ABB failed to grasp the benefits accrued to the grain industry with the merger as well as the refusal of some ABB directors to resign as the new merged companies would have only a 10-member board with five from each company.
Media, citing inside sources said that ABB had three directors who were opposed to the deal although a agreement had been thrashed out on the valuation of the new company wherein ABB's share of the split would be 55 per cent and AWB 45 per cent.
Late last month, AWB the largest Australian wheat exporter and ABB, the largest barley exporter started to explore merger options, as agricultural companies globally are looking at acquisitions, being optimistic about the fact that the global financial crisis would not impact surging food demand. (See: Australia's AWB, ABB Grain talk merger)
Earlier this month both the companies had hinted that they were close to an agreement to a deal, valued at more than A$2 billion.
Two other issues that could have been a sore sticking point was the ongoing litigation AWB was embroiled in the Iraq oil for food scandal as well as ABB's unsecured borrowings from banks while AWB had harsh security arrangements with its financers.
AWB said in a statement, "AWB maintains options for a strong and sustainable future under its own strategic direction and it is actively participating in the deregulated wheat export market. AWB is well positioned for an independent future or to participate in any industry consolidation that would be in the best interests of its shareholders."
ABB Grain said it would continue to operate as a stand-alone entity and was well positioned for an independent future regardless of any proposed or prospective merger and would review potential merger and acquisition opportunities in the global agriculture sector.
