Australia: Leading grain exporter CBH Group may start considering a sale soon - analysts

Archer Daniel Midland Co's appetite for Australian grain handler GrainCorp may prompt foreign investors to look for an even tastier agricultural deal out west, The Australian reported on November, 2.

Corporate Agriculture Australia managing director Gordon Verrall believes the GrainCorp deal -- which some say could be worth more than A$3 billion -- may prompt Western Australia's wheat farmers to consider a sale of their local grain-handling co-operative, CBH Group.

CBH, Australia's largest wheat, barley and canola exporter with assets of more than A$1.5 bln may be worth up to 2.5 times as much as its eastern peer because of its substantial international storage, infrastructure and processing network, he estimates.

That would equate to A$6.75 bln, under the terms of US-based ADM's current offer - or up to A$7.93 bln if it raises the bid from A$11.75 to A$13.90 a share, as some analysts are predicting.

..."Once farmers in Western Australia understand just how much their co-operative is worth, it will definitely put pressure on CBH to reassess the corporatisation process," Mr Verrall said.

"That'll become more apparent in the next few years, driven by those exiting the industry and those undergoing succession issues, who would appreciate a cash lump sum."

Established 80 years ago, CBH receives and stores more than 90 per cent of grain produced in Western Australia, the largest grain-exporting state. The co-operative, which includes roughly 4500 growers, owns 20 million tonnes of grain storage and infrastructure, as well as a port capacity of more than three million tonnes.

CBH has also recently expanded into processing, which includes taking a 50 per cent stake in the world's fourth-largest flour miller, Indonesia-based PT Eastern Pearl Flour Mills.

02 November, 2012