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Pressure on CBH to block Asciano deal

Pacific National - Credit Asciano

CBH is reportedly preparing a secondary submission to the competition authority to block the proposed takeover of Asciano by Bermuda-based infrastructure group Brookfield.

Asciano, the ASX-listed owner of ports group Patrick and rail group Pacific National, took a serious hit to its stock price earlier this month, when the Australian Competition and Consumer Commission (ACCC) delayed its verdict on the proposed $8.9 billion takeover offer from Brookfield.

Now the ACCC has invited more submissions from the industry as it seeks to justify a decision, grain group CBH – a key opponent to the takeover in the earlier stage of submissions – is said to be looking at ways to help the ACCC justify blocking the takeover.

Quoted in a Fairfax report, CBH said it would provide “further evidence” to the competition watchdog.

“It is important that attention is not diverted from the substantial lessening of competition that is likely to occur as a result of the current regulatory environment and the proposed Brookfield-Asciano merger,” CBH was quoted in the AFR.

Brookfield, which owns WA rail owner Brookfield Rail, insists there is no anti-competitive crossover between its business and Asciano’s. The Bermuda-based business has pointed out that CBH – one of its biggest critics – has vertical integration issues of its own, as it provides haulage, grain storage and export facilities for growers.

CBH disagrees.

“CBH notes that, as a non-distributing co-operative, it has different incentives to Brookfield Infrastructure and that CBH’s freight operations are run with a view to cover costs on a rolling five-year basis whilst ensuring that WA growers retain access to a critical component of an efficient supply chain to allow their grain to reach international markets,” CBH was quoted as saying.

The ACCC’s decision on the takeover has been pushed back to December.

Meanwhile, another global player – Archer Daniels Midland – is said to be moving toward making a second pass at east coast grain conglomerate GrainCorp.

ADM’s first attempt to buy GrainCorp was stifled in 2013 by then treasurer Joe Hockey, who blocked the move over concerns that a group as large and important as GrainCorp should not fall into foreign hands.

The new, Turnbull-led administration is thought to be more open to takeovers of that kind, however.

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