GrainCorp rejection tarnishes Australia's "open for business" sign

Sun Dec 1, 2013 3:59pm EST
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* Australia blocks $2.6 bln ADM takeover of GrainCorp

* Rejection doesn't set legal precedent, but could spook investors

* Investors need to play political game

* Door left ajar for ADM to have another tilt

By Jane Wardell

SYDNEY, Dec 2 (Reuters) - Australia's "open for business" sign is swinging precariously in the wind after the government blocked a A$2.8 billion ($2.6 billion) takeover of GrainCorp by U.S. agribusiness giant Archer Daniels Midland (ADM) .

The surprising decision to bow to pressure from grain growers is likely to spook foreign investors, who already think pushing a deal through in Australia is tough, international lawyers and bankers who work in mergers and acquisitions said.

Treasurer Joe Hockey rejected the deal - the third-biggest takeover by a foreign company in Australia to be blocked - after the Foreign Investment Review Board (FIRB) had failed to reach a consensus recommendation.

Citing national interest, Hockey said domestic grain growers were concerned the takeover of a company handling a third of Australia's wheat production would reduce competition and impede their businesses.   Continued...