Manufacturing News

GrainCorp’s oil business grows bigger

GrainCorp has bought Australia’s second largest oilseed crusher Gardner Smith and Goodman Fielder’s Integro edible oil refining and packaging business for $472 million.

According to GrainCorp, the acquisition will create “a leading integrated edible oils business in Australia and New Zealand that strengthens and leverages our grain business model.”

GrainCorp managing director and chief executive Alison Watkins said that combining Gardner Smith and the Integro fats and oils business was a logical fit and consistent with the company’s strategic focus on its three core grains – wheat, barley and canola.

One analyst said the deal made ‘‘some sense’’ and could fit in with its arm’s length manufacturing operation, Allied Mills, a joint venture with Cargill, which previously bid unsuccessfully for Integro, reported the SMH.

The combination of Integro and Gardner Smith would ‘‘build on GrainCorp’s existing supply chain management and grain marketing expertise, and expand downstream processing operations into canola and other edible oils.

GrainCorp is aiming for $4 million per annum of synergies (pre-tax) after the first 12 months according to the SMH.

The business has a capacity for crushing more than 300,000 tonnes of oilseeds annually along with 280,000 tonnes of annual edible fats and oils refining and packaging capacity.

“While both are very good businesses in their own right, it is the combination of the two into a cohesive whole that allows us to unlock additional value for GrainCorp’s shareholders,” Watkins said.

Graincorp trading manager at GrainCorp Marketing Sam Tainsh will be appointed as group general manager of GrainCorp Oils.

GrainCorp's shares rose 0.2 percent to $A9.85 on the ASX yesterday. 

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