GRAINCORP stocks fell more than 20% and farmers celebrated after Treasurer Joe Hockey turned down a takeover proposal for the east coast grain company from the United States on Friday.
The decision to deny the Archer Daniels Midland takeover bid brought criticism from business circles, but was celebrated in ranks of The Nationals and rural Liberal MPs.
But it also laid bare the political decision making process behind the scenes, with Mr Hockey, a disciple of the free market, bowing to pressure from within government ranks to refuse the proposal.
Mr Hockey said his decision, previously delayed by the Gillard government, was only one of 131 foreign investment proposals he had turned down since taking office.
He said key issues he considered in the decision were growers, stakeholders, and "the broader community" concerns.
"I therefore judge that allowing it to proceed could risk undermining public support for the foreign investment regime and ongoing foreign investment more generally. This would not be in our national interest," he said.
However, Mr Hockey said while he was not open to a 100% takeover, he would likely approve any approach from ADM to increase its shareholding from just over 19% to 24.95%.
"This would also provide a platform for ADM to build stakeholder support for potentially greater participation in the Australian industry as it develops," he said.
But it had highlighted concerns within financial markets and economic circles that Mr Hockey was bound to the political calls he received before he made the decision.
It follows Mr Hockey declaring some weeks ago that he would not bullied by "anyone" on the proposal, despite even the Deputy Prime Minister Warren Truss making his opinion on the matter known.
Following the news, Graincorp stocks were stripped of more than 21% of market value, with investors fleeing the company after expecting the deal would go ahead.
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