News: Bumper wheat crop may delay revitalised bid for Australia's CBH

Record output in Australia's largest grain producing state will likely delay efforts to revive a stalled bid for the country's biggest wheat exporter, Cooperative Bulk Handling Ltd (CBH), until early 2017, two sources familiar with the deal said.

Grain production in Western Australia is on course to reach up to 16 million tonnes when the harvest starts in November, bulk grain handler CBH said last week, forcing the construction of emergency storage for silo-bursting supplies.

Australian Grains Champion (AGC), a consortium backed by CBH's east-coast rival GrainCorp Ltd (GNC), wants to buy and immediately list CBH in a deal valued by analysts at up A$3 billion ($2.3 billion).

CBH rejected the offer in March, but AGC has left the proposal on the table and aims to lobby CBH's 4,200 farmer-owners to push the board to put the plan directly to members.

"The big harvest, while welcomed, is not the friend of AGC as the farmers will be focused on harvesting and not the offer on the table," said a source close to AGC, who spoke on condition of anonymity.

AGC has renewed its lobbying of farmers in recent days after an independent report valued CBH at A$2.56 billion, giving farmers an independent assessment of the size of the deal.

By proposing a listing, AGC was legally prohibited from forecasting to farmers how much they would receive should they approve the consortium's offer.

"The fact that someone has put a valuation on CBH is good for AGC as the farmers now understand what the offer is for them individually," said a second source familiar with the consortium's plans.

CBH, meanwhile, has promised an internal review into its structure, and is expected to report the findings next month.

Analysts expect CBH to recommend a partial initial public offering, while maintaining its co-operative structure, aiming to give farmers the ability to cash out their holding if they choose.

AGC, however, has been pitching that CBH is reluctant to commit to the IPO and backing the consortium's offer is the best option to realise capital, farmers say.

CBH executives, meanwhile, have played up Sydney-based Graincorp's backing of AGC to persuade farmers to reject the offer.

"Western Australian growers have been very clear that they don't want GrainCorp involved in their supply chain through AGC," CBH chief executive Andy Crane told Reuters.

"Western Australian growers know what works for them and they don't need GrainCorp." ($1 = 1.3151 Australian dollars)