GrainCorp is going to retain a 10 per cent share in the new US-based malt operation. As already reported earlier, Australia's biggest listed agribusiness will split off its highly-profitable malt divison under its old name United Malt in late March or early April “to unlock significant value for shareholders” (inside.beer, 9.2.2020).
While GrainCorp directors initially hoped not to have any lingering investment link with the maltster, the retained share will provide a modest, but useful, extra income stream, plus share capital which could be liquidated if needed at a later date.
"The aim was to make it as small as possible, and 10% was the right balance," GrainCorp’s Chairman Graham Bradley explained. "If we had less core debt we may not have retained any stake," he said.
GrainCorp bought the malting group in 2009 and took profit from the growing craft beer industry as those beers are brewed with about twice the amount of malt than mainstream commercial beers. The company also made another windfall profit from strong sales of Scotch which also needs a lot of malt and which is served through its UK subsidiary Bairds Malt.
GrainCorp currently owns 13 malt processing plants in USA, Canada, Australia and Great Britain. In addition, the company operates in all of its markets craft beer supply companies like the Country Malt Group in USA, Cryer Malt in Australia and Brewers Select in UK. Those companies supply through several warehouses the local craft and home brewing community with malt, hops and other material needed in the daily brewing process.