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South Australian grain companies ABB Grain Ltd and AusBulk Ltd conceded on March 3 there was no chance they would ever join together, after failing for the third time to reach a merger agreement. Despite the benefits to both companies of a merger - including synergies of up to $10 million - they have been unable to agree on each other's company valuations.

AusBulk chairman Kevin O'Driscoll said there were also cultural differences between the companies."I'm disappointed that our mutual shareholders are not going to see the benefits of those synergies and cost savings," Mr O'Driscoll said. "But I think the reality is that there are just very large cultural differences between the two organisations which became evident during negotiations, and I think that the chances of any future merger are dead and buried."

Analysts had said the two companies would complement one another. ABB Grain's main activity is the marketing of grain, particularly barley, to countries around the world, while AusBulk specialises in grain storage. However ABB Grain and AusBulk had twice previously discussed mergers, and both times failed to come to an agreement.

Mr O'Driscoll said AusBulk's focus now would be on listing on the Australian Stock Exchange in July 2004. He said there were no plans for AusBulk to merge with any other companies. "We will be looking for organic growth," he said.

ABB chairman Trevor Day last week told the company's annual general meeting that the notion of bringing the two companies together was an attractive one. However he said in a statement on March 3 that the companies had been unable to bridge the gap over their valuations. Mr Day said ABB's directors remained strongly focused on strengthening the company's business base while exploring growth opportunities both in Australia and offshore.

An immediate challenge for ABB - which currently holds the South Australian bulk barley export single desk - will be the issuing of other export licences in the state later this year. Analysts had said that a merger with AusBulk would have strengthened ABB's position ahead of the opening of the market to other competitors.


05 March, 2004