UPDATE 5-Australia spurns ADM's $2.6 bln GrainCorp bid, shares drop

Fri Nov 29, 2013 11:55am EST
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* Treasurer Hockey rejects offer on national interest grounds

* Grain growers worried about foreign ownership of key east coast handler

* GrainCorp shares fall by a quarter to below pre-bid levels

By Lincoln Feast and Colin Packham

SYDNEY, Nov 29 (Reuters) - Australia rejected a A$2.8 billion ($2.6 billion) takeover of GrainCorp by U.S. agribusiness giant Archer Daniels Midland (ADM) on Friday, bowing to pressure from grain growers in a rare and surprising decision.

GrainCorp shares plunged, losing a quarter of their value, as the rejection by Treasurer Joe Hockey effectively ring-fenced Australia's last major independent grains handler from any takeover.

The deal had been seen as the first test of the conservative government's vow that Australia was "open for business" after the victory of Prime Minister Tony Abbott in September elections.

"It would have been great consolidation for ADM and beneficial for Australian farmers and the grains industry. It's a pity it did not get through," said Vijay Iyengar, managing director of Singapore-based trading company Agrocorp International. "The food sector is always very sensitive."

Hockey said he was rejecting the proposal on national interest grounds after Australia's Foreign Investment Review Board (FIRB) failed to reach a consensus recommendation.   Continued...