GrainCorp to Demerge its Global Malting Business


On 4 April 2019, GrainCorp Limited (ASX: GNC) a global food, beverage and tobacco agribusiness, shared its intention to demerge global malting business based on the shareholder approval and other such approvals.

The proposed separation of the global malting business will result in the two independent ASX-listed companies – MaltCo and New GrainCorp.

MaltCo will be involved in craft brewing distribution and global malting. On the other hand, New GrainCorp will be taking care of the domestic as well as the international grain handling, storage, trading along with the processing business. New GrainCorp will focus on grains, oilseeds, pulses, edible oils as well as the feeds.


After the intended business separation, MaltCo will rank fourth among the global independent maltsters, with malting houses across the world. MaltCo is also operating the leading craft malt distribution business, Country Malt Group, situated in North America.  MaltCo possesses high quality, low operating cost processing assets from which it derives benefits. These assets are based in the premium barley growing areas. In FY2018, MaltCo reported $170 million EBITDA.

Further, the strategic focus of this unit will be on developing an international portfolio. It will comprise of growing its recently expanded 220,000 metric tonne Pocatello malting plant located in Idaho, United States. Recently, there was a 79,000 metric tonne capacity expansion in Inverness and Arbroath, Scotland, which will also be considered under the strategic focus of the company.

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MaltCo serves in the segments, such as specialty malt, whisky and craft beer markets, in which the group services are experiencing significant growth. As a result, the balance sheet of MaltCo will have flexibility in order to support the capital investment for growth opportunities.

New GrainCorp

Post the proposed demerger, New GrainCorp will be an integrated global agribusiness in Australia, New Zealand, North America, Asia, Europe and Ukraine, where it will be responsible for grain handling, storage, trading and processing operations. In Eastern Australia, New GrainCorp will be operating the largest grains storage, marketing network. Along with this, it will be taking care of the largest integrated edible oils business in Australasia. The strategic focus of New GrainCorp is to build and develop its oilseeds as well as the global grain origination network. It will also include the ongoing investment in the GrainsConnect Canada supply chain followed by its growth in the new markets in the Indian subcontinent as well as the Black Sea. It will also be aiming the domestic, on-farm along with the niche grain markets.

The storage and logistics infrastructure assets of the New GrainCorp comprises of 145 country receival sites, which have a storage capacity of 20 million tonnes along with the seven bulk grain export terminals that are playing a critical role in the grain export supply chain in Eastern Australia.

New GrainCorp aims to preserve an investment grade capital structure after the merger is completed. Also, the Grains business unit has delivered a range of initiatives that could be beneficial for the New GrainCorp. Based on these initiatives, New GrainCorp could expect to have an increased ‘through-the-cycle’ EBITDA by $55-80 million per annum.

Post the demerger implementation, the shareholders of GrainCorp will be receiving the shares of MaltCo in proportion to their current share in GrainCorp. These shareholders will be retaining the shares of GrainCorp as well.

At present, GrainCorp is strategizing to obtain demerger tax relief from the ATO.

Further, the company expects the demerger to get implemented by the end of CY2019 via a scheme of arrangement, which will require the approval from the shareholder, final Board, Court and regulatory bodies.

By the close of the market on 4 April 2019, the closing price of the stock was A$9.500, up by 2.151% as compared to its previous closing price. Today, 5 April, the stock is 0.68% down, trading at A$9.435 (as at 2:05 PM AEST). The company has a market capitalisation of ~A$2.17 billion.


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