CANBERRA, Australia (AP) - Australia on Friday blocked the 3.4 billion Australian dollar ($3.1 billion) takeover bid by U.S. food giant Archer Daniels Midland Co. for Australian grains handler GrainCorp Ltd.

CANBERRA, Australia (AP) Australia on Friday blocked the 3.4 billion Australian dollar ($3.1 billion) takeover bid by U.S. food giant Archer Daniels Midland Co. for Australian grains handler GrainCorp Ltd.

Treasurer Joe Hockey, invoking a rarely used power to block foreign investment, said he rejected the 100 percent takeover of GrainCorp on the grounds that it would not be in the Australian national interest.

The application was the most contentious foreign takeover bid since previous governments blocked the sale of the Australian Securities Exchange to the Singapore Exchange in 2011 and Royal Dutch Shell PLC was barred from buying Australian oil and gas rival Woodside Petroleum Ltd. In 2001

GrainCorp owns more than 280 Australian grain storage sites and seven grain port terminals and handles 85 percent of eastern Australia's bulk grain exports.

Archer Daniels Midland also known as ADM owns 19.85 percent of GrainCorp. Hockey said he would allow the company to increase its stake to 24.9 percent.

"Many industry participants, particularly growers in eastern Australia, have expressed concern that the proposed acquisition could reduce competition and impede growers' ability to access the grain storage, logistics and distribution network," Hockey said in a statement.

ADM chairman and chief executive Patricia Woertz said the company was disappointed by the decision.

"We are confident that our acquisition of GrainCorp would have created value for shareholders of ADM and GrainCorp, as well as grain growers and the Australian economy," Woertz said in a statement.

ADM in May first lodged its takeover application with Australia's Foreign Investment Review Board, which reports to the treasurer on whether proposed foreign takeovers pass the Australian national interest test.