Australia buys Canada Malting Ltd.

Canada’s largest malting company has been caught up in a major restructuring of the world’s malting industry.

However, industry observers say they expect the changeover will have little impact on Canada’s malting sector or malting barley growers.

“I suspect it will be business as usual,” said Phil de Kemp, president of the Malting Industry Association of Canada.

Canada Malting Ltd. (CML), which accounts for about half of this country’s malting capacity, is now owned by GrainCorp Ltd. of Australia.

Related Articles

GrainCorp last week paid $714 million to buy United Malt Holdings, the world’s fourth-largest maltster, owning 14 plants around the world, including the United States, the United Kingdom and Australia, along with Canada Malting Ltd.

CML is the Canadian operation of UMH’s North American Malting, which also owns Great Western Malting of the U.S.

GrainCorp chair Don Taylor said in a news release the deal would strengthen the company’s core business, reduce the seasonal volatility of its earnings, support long-term growth and increase short-term earnings.

The deal is slated to close in mid-November.

Canada Malting president Steven Gorst could not be reached for comment.

However, de Kemp and other industry observers said they don’t expect much change in CML’s operations. They say CML is a long-established, successful company with considerable expertise, experienced staff, good technical services and customer contacts around the world, so there is no reason to make changes.

“I assume the buyer is doing so because it likes what they have and what they do,” said one malting industry executive who asked not to be identified.

“I would look at this being purchased as a going concern.”

He said Canada has an international reputation as the leading supplier of high quality malt and he doubts a new owner would do anything to jeopardize that.

Doug Robertson of the Western Barley Growers Association said as far as he’s concerned the deal is of no concern for producers.

“We’ve been through this kind of thing before,” he said from his farm at Carstairs, Alta. “They have no reason to come in and make changes.”

Canadian malting companies buy about 1.1 million tonnes of malting barley annually, turning it into about 900,000 tonnes of malt.

CML, with plants in Calgary, Thunder Bay, Ont., and Montreal, has about 50 percent of the market.

Next is Prairie Malting Ltd. of Biggar, Sask., at 25 percent, Rahr Malting of Alix, Alta., at 15 percent and Malteurop of Winnipeg, formerly Dominion Malting, at 10 percent.

Foreign ownership is the norm for the Canadian malting industry.

Prairie Malt is owned 60-40 by Cargill and Viterra, Rahr is U.S.-owned and Malteurop is owned by Malteurop Group, the world’s biggest malt producer, with 23 plants in 12 countries.

De Kemp said GrainCorp’s announcement came as no surprise because of the recent spate of consolidation and foreign takeovers in the malting and brewing sector.

“We’ve seen a lot of that in the brewing industry and now you’re starting to see it in the malting industry as well.”

The unidentified executive said there were rumours at this time last year that CML was on the market and that there were interested bidders, but nothing came of it.

Coincidentally, as part of Viterra’s recent purchase of ABB Grain of Australia, the Canadian grain giant also took ownership of Joe White Maltings, the largest malting company in Australia.

De Kemp said he assumes GrainCorp is aware of the Canadian malting industry’s desire to see an end to the Canadian Wheat Board’s single desk marketing power.

“We certainly welcome them to the industry here,” he said.

“They obviously see an opportunity and I’m sure they’re aware of the political challenges.”

CWB officials declined to comment about the transaction.

An Australian market analyst described the purchase of UMH as a “company-transforming deal” for GrainCorp.

“The combined group provides diversification and stability for a large international agribusiness going forward,” Belinda Moore of RBS Morgans said in a published commentary.

An analyst at Australian brokerage firm E.L. and Baillieu was quoted by Reuters News Service as saying there could be more such transactions in the quickly evolving Australian grain and agriculture industry as stakeholders continue to adjust to the demise of the single desk AWB Ltd.

About the author

Comments

explore

Stories from our other publications