Shares of Graincorp Ltd (ASX: GNC) have opened lower today after the company released an update regarding its proposed sale of its Australian Bulk Liquid Terminals. The GrainCorp share price opened at $8.76 this morning, but (at the time of writing) has fallen 2.61% to $8.57.
The company announced on 4 March 2019 that it proposed to sell its terminals to ANZ Terminals Pty Ltd, but during pre-trading hours this morning, the ASX was informed that the Australian Competition and Consumer Commission (ACCC) has raised "preliminary concerns" over the deal. Here's some of what the ACCC had to say in justifying its decision:
"ANZ Terminals and GrainCorp both provide port-side bulk liquid storage services in New South Wales, Victoria and South Australia, where they compete to store liquids …Our preliminary view is that the acquisition will remove a significant competitor in what is an already concentrated industry in NSW, Victoria, and South Australia… In some locations, the acquisition will lead to ANZ Terminals becoming the only storage provider for some liquid products. This loss of competition could result in higher prices for customers, or lower levels of service."
Although ANZ Terminals has provided notice that it intends to divest a terminal in South Australia, the ACCC has noted that although it is considering this proposal, it retains concern over the competition levels in New South Wales and Victoria.
GrainCorp has responded this morning as well, issuing a statement noting that the ACCC has made a preliminary decision and not a final one, and that GrainCorp will continue to work closely with the ACCC "to provide the information it requires". The company also noted that "the proposed sale remains subject to FIRB approval" as well as "additional Conditions Precedent".
The ACCC is currently taking submissions from "interested parties" until 8 August 2019 and has scheduled a final decision for 17 October.
