Covering the Goulburn and Murray valleys

GrainCorp buys Riverland Oilseeds

A Numurkah oilseed company will be changing hands under a deal being organised by GrainCorp.

September 20, 2012 4:04am

GrainCorp could soon own a company which processes some of Northern victoria's oilseed crop.

GrainCorp has launched a $159million capital raising to fund its acquisition of Goodman Fielder’s commercial oils business, Integro Foods.

It plans to merge Integro with crusher Gardner Smith — which owns Numurkah’s Riverland Oilseeds — to create what would become the second-largest oilseed player in Australia.

Chief executive Alison Watkins said GrainCorp could have funded the entire deal with debt but opted to raise capital to maintain financial flexibility.

The move fits with GrainCorp’s strategic focus on its three core grains: wheat, barley and canola. The new division, GrainCorp Oils, will be headed by Sam Tainsh and will have an annual crushing capacity of 300000 tonnes of oilseeds, a refining and packaging capacity of nearly the same amount at 280000 tonnes and a total of 13 bulk liquid terminals.

‘‘The opportunity to combine Gardner Smith and Integro into a larger business is a clear and logical fit with our business model,’’ Ms Watkins said.

‘‘Together they build on GrainCorp’s existing supply chain management and grain marketing expertise, and expand our downstream processing operations into canola and other edible oils.

‘‘GrainCorp Oils will provide us with immediate scale in the edible oils sector in Australia and New Zealand.

‘‘Both Gardner Smith and Integro offer us leading positions along the edible oils supply chain,’’ she said.

‘‘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, and connects the grain growers who use our network more closely with edible oils customers.’’

Commonwealth Bank of Australia analyst Jordan Rogers said the new company would create a ‘‘genuine competitor to Cargill Inc’’ in the Australian oilseeds sector, although GrainCorp Oils will still be around half the size of the number one player.

Goodman chief executive Chris Delaney said the company had also signed a long-term supply partnership with GrainCorp to ensure an efficient supply of raw materials for its retail fats and oils brands, which included Meadow Lea, Praise and Paul Newman salad dressings.

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