The Treasurer Joe Hockey has cleared the way for the Canadian food giant Saputo to take over the Victorian dairy processor Warrnambool Cheese and Butter.
In approving his first major foreign investment application, Mr Hockey made the point of saying that Australia is “open for business”.
Mr Hockey has another more controversial decision to make just before Christmas on the bid by US firm Archer Daniels Midland for Graincorp, which is already causing tensions within the Coalition.
Mr Hockey’s statement on the Saputo deal was very brief.
He placed no conditions on the proposal, saying the future ownership of Warrnambool was in the hands of shareholders.
This has provided certainty for Saputo, however it it is not a done deal.
There are two other local bidders, Bega Cheese and the Murray Goulburn Cooperative.
So far Saputo has the most cash on the table, offering $8 per share.
That deal is favoured by the Warnambool board, but the bidding game looks set to continue, given that shares are trading at $8.54 today.
Hockey hints at view on GrainCorp
In his approval, the big point Mr Hockey had to make came in the final line.
He said that Australia “is open for business” and foreign investment is welcome “when it’s not contrary to the national interest”
That wording is critical because it underscores the national interest test that the Foreign Investment Review Board assesses when it provides advice to the Treasurer
That same national interest test will be applied when FIRB assesses ADM’s bid for GrainCorp.
This is a much bigger and more controversial deal, given the size of GrainCorp and the concerns from grain growers over access to storage and infrastructure
There’s also been a lot of pressure from Nationals, like Deputy Prime Minister Warren Truss and Agriculture Minister Barnaby Joyce, to veto ADMs bid on national interest grounds.
Mr Hockey said last week he won’t be pressured by anyone, but the lobbying seems set to go right down to the deadline of December the 17th.
ADM is offering $3.4 billion for the company.