Cargill is exploring several options to exit the malt business, as already reported earlier. (inside.beer, 6.9.2018) One of the options is to sell the entire business. As The Australian reported on Thursday, Graincorp is set to swallow Cargill Malt as a whole.
According to the report “Graincorp will make a tilt for the entire operation” as “CEO Mark Palmquist has now been in the job four years and is understood to have grand plans for the listed company.”
Currently, GrainCorp’s share price suffers due to the drought and the company aims to diversify its business to become less dependent on the volatility of grain prices. A further forward integration into the malt business would help to stabilize earnings.
Another advantage for GrainCorp could be that Cargill and the Australian grain handler already know each other very well from the sale of the joint venture in Allied Mills. On January 31, 2018, GrainCorp and Cargill Australia agreed to sell Australia’s largest miller for a combined considered value of A$317 million (US$ 226m) to Pacific Equity Partners (PEP). As GrainCorp previously held 60% in the joint venture, the company received proceeds totaling A$190 million (US$ 135m)
“The funds of A$190 million will provide flexibility as we approach our peak gearing and remain available for other redeployment opportunities,” GrainCorp’s chief financial officer Alistair Bell said at that time.
The Australian reported earlier that Credit Agricole had been appointed to sell Cargill’s malt business and the sales documents will be out in just weeks.