While takeover clouds hang low over GrainCorp in Australia, the company is expanding its footprint in Canada with a $36.3 million commitment to a port project in Vancouver.
GrainCorp and its Japanese farmer co-operative partner in the GrainsConnect Canada business, Zen-Noh Grain Corporation, have signed up to help build the new Fraser Grain Terminal.
The Fraser terminal at the Port of Vancouver was announced last month by family-owned Canadian agribusiness, Parrish and Heimbecker (P&H).
The P&H project, due for completion in 2020, will now become a 50-50 joint venture with GrainsConnect.
P&H already operates in more than 60 locations across Canada, including at grain export ports, and has trade links worldwide.
Its business activities include Canada’s largest locally-owned flour milling business, with eight processing plants; 40 country and seaboard grain storage and export sites; a stockfeed products and milling division; a crop input supplies and advice network, and a grain product trading division.
GrainCorp will contribute $C35m in the next two years to support construction of the new port terminal.
The Fraser Grain Terminal will help create a fully integrated, high-speed and end-to-end supply chain for the company (GrainsConnect) in western Canada
Further funds will be sourced from financial institutions once the agreement receives regulatory approval.
The new port elevator will link GrainsConnect Canada’s high-capacity country delivery sites directly to export markets.
GrainCorp noted the project was consistent with its strategy to expand its grain origination footprint and increase access to global customers.
“It will create a fully integrated, high-speed and end-to-end supply chain for the company in western Canada,” the company said in statement to the Australian Securities Exchange.
GrainsConnect has built four rapid, high capacity country grain elevators in Vegreville and Huxley, Alberta, and Maymont and Reford in Saskatchewan.
In accordance with its half share in the GrainsConnect Canada joint venture, GrainCorp told the ASX its contribution would be made from existing cash and debt facilities.
The GrainsConnect joint venture kicked off in 2015 when GrainCorp teamed up with Japanese customer, Zen-Noh Grain Corporation, a subsidiary of the big National Federation of Agricultural Co-operative Associations.
The Canadian venture boasts “competitive pricing, game-changing efficiency and access to global grain demand”.
New port terminal joint venture partner P&H was founded in 1909 and has grown into a diversified and vertically-integrated operation spread from coast to coast with a network of assets, strong business relationships with customers and suppliers, and ongoing infrastructure development to support Canadian farmers.
GrainCorp executives said regardless of last week’s confirmation of a proposed $2.4 billion takeover offer by newly-minted private equity player Long-Term Asset Partners, it was business as usual for the company in Australia and overseas.
However, news of the Canadian project did not exactly excite share market investors, with GrainCorp shares dipping to about $9.09 on Wednesday afternoon.
Shares in the big east coast grain handling, marketing and processing business had hit highs around $9.30/share when last week’s takeover bid became public.
A detailed explanation of the LTAP bid has not yet been released because both parties are still negotiating the terms of due diligence investigations which will assess the credentials of the bid and examine GrainCorp’s books.
LTAP said the GrainsConnect Canada announcement did not change its plans to offer $10.42 a share for GrainCorp stock and eventually de-list the business from the ASX.
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