GrainCorp Limited has detailed plans to its shareholders to help fight of a $2.9bn buyout buy demerging its global malting business and listing it as a separate entity on the ASX.
The move would see both MaltCo and New GrainCorp listed, with GrainCorp saying that MaltCo becoming the world’s fourth largest independent maltster. MaltCo services the specialty malt, whisky and craft beer markets which are all experiencing substantial growth.
GrainCorp Chairman, Graham Bradley, said: “The board believes that the demerger would unlock significant value for shareholders by establishing two unique and high-quality ASX-listed agribusinesses with focused management teams able to pursue independent strategies and growth opportunities.”
MaltCo operates malting houses in Australia, the United States, Canada and the United Kingdom and also operates Country Malt Group, a leading craft malt distribution business in North America.
In its statement to the ASX about the proposed demerger, GrainCorp said: “MaltCo benefits from high quality, low operating cost processing assets strategically located in premium barley growing regions.
“These assets have benefited from significant historical investment and are expected to require stay in business capital expenditure of $15-20m per annum. In FY18 MaltCo generated EBITDA of $170m.”
GrainCorp CEO, Mark Palmquist will remain in his role until the demerger has been completed and will then become Managing Director and CEO of MaltCo. The company said that given this intended appointment alongside a place on the MaltCo board he has resigned his position at GrainCorp and stepped down from the GrainCorp board.
Klaus Pamminger, currently Group General Manager Grains, has been appointed as Chief Operating Officer of GrainCorp and will replace Palmquist as Managing Director and CEO of GrainCorp once the demerger is completed.
Palmquist said: “Our portfolio review made clear that these businesses have different characteristics and would benefit from operating separately. A demerger would provide both MaltCo and New GrainCorp with increased flexibility to implement independent operating strategies and capital structures and allow them to attract investors with different investment priorities.”
Following the proposed demerger, New GrainCorp will be an integrated global agribusiness with grain handling, storage, trading and processing operations in Australia, New Zealand, North America, Asia, Europe and Ukraine, focused on grains, oilseeds, pulses, edible oils and feeds.