GrainCorp plans to demerge global malting business in portfolio review

AUSTRALIA – Australia’s grain and commodities supplier, GrainCorp has announced intentions to demerge its global malting business to form MaltCo to enable a more strategic focus on the division.

The strategic portfolio review will see the creation of two separate businesses to create one of the world’s leading malting business and a stand-alone Australian-focused grains business.

The demerger would result in two independent ASX-listed companies; new GrainCorp focused on grains, oilseeds, pulses, edible oils and feeds and MaltCo, a global malting and craft brewing distribution business.

According to GrainCorp, MaltCo will become the world’s fourth largest independent maltster with malting houses in the United States, Canada, Australia and the U.K. MaltCo operates Country Malt group, a craft malt distribution business in North America once the demerger is complete.

“MaltCo will focus on developing its international portfolio, including by building on the growth of the recently expanded 220,000-tonne Potacello malting plant in Idaho, U.S., and the current 79,000-tonne expansion of capacity in Inverness and Arbroath, Scotland,” said GrainCorp.

Adding capabilities in grain

New GrainCorp will be a global agribusiness with grain handling storage, trading and processing operations in Australia, New Zealand, North America, Asia, Europe and Ukraine.

It will focus on building and developing its global grain and oilseeds origination network by continued investment in the GrainsConnect Canada supply chain and expanding into new markets in the Black Sea and Indian subcontinent.

It will also include storage and logistics infrastructure assets with 145 country receival sites, with 20 million tonnes of storage capacity and seven bulk grain export terminals.

With the new grains business, the company anticipates benefitting from operational improvements in grain stocks management, grains cost reduction initiatives, new rail contracts, and improved asset utilization.

The Grains Business Unit is expected to benefit from supply chain integration as well as expanded footprint in Canada, Ukraine and India.

The company said it will spend to up to US$32.02 million (AUD 45 million) per annum in capital expenditures in the New GrainCorp business.

Ongoing business & portfolio review

As part of the business review, Mark Palmquist, chief executive officer of GrainCorp will become managing director and CEO of MaltCo.

He will resign from his managing director role and step down from the GrainCorp board.

Upon completion of the demerger process, Klaus Pamminger, currently group general manager of grains will become managing director and CEO of New GrainCorp.

“Our portfolio review made clear that these businesses have different characteristics and would benefit from operating separately,” said Mark Palmquist.

“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.”

GrainCorp has also announced that it has agreed to sell to sell its Australian Bulk Liquid Terminals business to ANZ Terminals Pty. Ltd. for approximately US4249.27 million (A$350 million).

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