GrainCorp will need to alter terminals deal if it wants ACCC approval

GrainCorp Managing Director Mark Palmquist. Picture: Supplied

GrainCorp chief Mark Palmquist will have to make some changes to his $350m deal to sell bulk liquid terminals to ANZ Terminals after the ACCC issued an effective rejection of the deal.

The ACCC grades rejections from red to green and this one was a red which means it will take some convincing that it is not a significant block to competition.

The concern is in three states (NSW, Victoria and South Australia) where the two companies are the number one and two players in the so-called base oils sector that includes lubricating grease and other oils from refined crude.

The rejection comes on the same day the ACCC cleared the AP Eagers bid for AHG which will create the country’s biggest national car dealer.

The deal was the fist formal approval sought under new competition law rules which allow the ACCC to consider national interest issues. The only way to move to the next stage of the Competitiion Tribuinal is if the ACCC rejects a deal.

Both sets of decisions must be made within three months which seems to be the motivating factor in applying for a formal clearance.

The terminals deal was part of Palmquists’s attempt to simplify the business with the next step being the sale of its malts arm.

GrainCorp has eight terminals and overlaps with ANZ in NSW, Victoria and South Australia.

ANZ Terminals had offered to sell one of the South Australian terminals to get the deal cleared but this was rejected.

One issue was barriers to entry with limited land available around ports which gives the acquirer, ANZ a natural edge.

ANZ is owned by a group of infrastructure funds. The import community was the most vocal objector to the deal.