Australia: Demerger of GrainCorp Malt still on track

GrainCorp, the Australian grain handler and maltster is still on track with its intended spin-off of its malt business in a separate company and its listing on the Australian Securities Exchange (ASX) (, 4.4.2019) The demerger which will separate the world’s fourth largest malting company from the Australian grain and oil business, which was impacted this year heavily by the drought in Australia is planned to be completed in December. It could value the malting business at USD 1.7 billion and the new Graincorp at USD 889 million, analysts from Swiss multinational investment bank UBS said last week.

The bankers backed GrainCorp's decision to demerge or sell its malt business, reckoning that EBITDA of the division should increase from USD 175 million in the 2019 financial year to USD 194 million in 2021.

In March, GrainCorp agreed to sell its Australian bulk liquid terminals business to ANZ Terminals for an enterprise value of AUD350 million (USD249 million). In addition, the company said it was also reviewing options for its New Zealand bulk liquid terminals business.

However, the approval of the Australian Competition and Consumer Commission (ACCC) for the sale is still outstanding and is due on November 15. UBS believes if the ACCC blocks the sale, the demerger could also be delayed. Initially it was announced, that the demerger could be completed in late 2019.

Next to a public listing of GrainCorp’s malt business, a direct sale to a third party is also a viable option. In July, rumors emerged that private equity heavyweights were heaving a close look at GrainCorp’s books.

"Everything is for sale - if the right offer comes along," Mark Palmquist, Chief Executive Officer of GrainCorp said in August. "Both the malt and the grains and oils businesses could possibly still be attractive to somebody."

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