* Concerned offer could lead to full takeover by GrainCorp
* Must ask what GrainCorp's long-term intentions are -CBH
By Sonali Paul and Colin Packham
PERTH, Feb 24 (Reuters) - Co-operative Bulk Handling Ltd (CBH), Australia's largest wheat exporter, said it was concerned a buyout offer from a consortium backed by rival GrainCorp Ltd GNC.AX could lead to an eventual full takeover by the east coast grain handler.
Last week, GrainCorp joined the consortium that aims to buy and list CBH, valued at up to $2.1 billion. Australian Grains Champion (AGC), a grower-led initiative that includes farmers and some former directors of CBH, is leading the consortium.
GrainCorp said it would be a cornerstone investor with a commitment of as much as A$600 million ($430.56 million), which would be transferred to an equity stake in CBH once it was listed. This investment would give GrainCorp a 20 percent stake in CBH if it was valued at A$3 billion. deal, however, is seen by some analysts as a potential first step in a saga that puts GrainCorp in the box seat to take over its west coast rival, a suggestion CBH's chairman raised in a speech at a shareholders' meeting in Perth on Wednesday.
"We must ask what GrainCorp's long-term intentions are?" said Wally Newman, chairman of CBH. "Is it GrainCorp's intention to later buy 100 percent?"
A similar scepticism was evident in comments from CBH's farmer owners.
"AGC is just a smokescreen for GrainCorp, as far as I'm concerned," said a farmer, who declined to give his name. "They've tied up with some investors which just puts a friendly face on it. It's a hostile takeover by GrainCorp."
GrainCorp could not be immediately reached for a comment.
It has previously said joining the CBH proposal was part of its strategy to diversify away from production in Australia's east coast, where dry weather has hurt crops. Western Australia is Australia's top grain producing region.
OTHER CONCERNS
GrainCorp's long-term intentions was one of a number of "concerns" raised by CBH at its meeting.
The cooperative, which is yet to make a decision on the buyout, said it was worried the deal could lead to higher costs.
The Australian cooperative does not pay taxes, but if it accepts the buyout, CBH will be stripped off this privilege and will need to pay as much as A$40 million a year, said Newman.
The cooperative was also worried it would be liable to repay debt secured by the consortium backers to fund the buyout.
Under the terms of the AGC proposal, the cooperative's shareholders would receive shares in the leader of the consortium along with A$600 million sweetener.
Australia is the world's No.4 wheat exporter, but it is also rated as the world's most expensive country to produce wheat. ($1 = 1.3935 Australian dollars)