ADM set to complete acquisition of Australia’s GrainCorp for $2.95bn

US-based agri-processing company Archer Daniels Midland (ADM) is close to completing the acquisition of Australia’s largest grain exporter after GrainCorp accepted its A$2.8bn ($2.95bn) takeover bid.

ADM agreed to pay A$12.20 ($12.60) per share in cash to acquire GrainCorp.

In addition, it will pay GrainCorp shareholders a one-time A$1 ($1.02) per share special dividends, subject to due diligence, which takes the value of the deal to A$13.20 ($13.60) a share or A$3.4bn ($3.5bn) including GrainCorp’s net debt.

ADM chairman and CEO Patricia Woertz said that GrainCorp is a leader in the Australian agribusiness sector.

"Should the offer proceed, the addition of GrainCorp to our global network would fit our strategy and help to further connect Australia’s growers with growing global demand for crops and food, particularly in Asia and the Middle East," Woertz added.

ADM’s offer is subject to several regulatory approvals, including China, where GrainCorp owns assets.

However, if the regulatory conditions are not achieved by 1 October 2013, GrainCorp will pay shareholders an additional dividend of A$ 0.035 ($0.035) per share for each month.

If successful, the acquisition of GrainCorp would be the largest purchase for ADM following its acquisition of W.R. Grace & Co.’s cocoa business for $470m in 1996.

The acquisition bid by ADM is part of its strategy to strengthen its agricultural services and oilseeds businesses by investing in key supply regions outside the US.

Barclays and Citi are acting as financial advisors for ADM, while Corrs Chambers Westgarth and Cravath, Swaine & Moore are advising GrainCorp.

The latest offer is the third since ADM’s initial approach, when it acquired a 19.8% stake in GrainCorp to diversify away from reliance on the US.

In October 2012, GrainCorp rejected the A$11.75 ($12.13) per share offer made by the US agri-processing firm, stating that the bid was too low.

In December, ADM raised its offer by 3.8% to A$12.20 ($12.85) per share; however, GrainCorp rejected it saying that the offer did not represent its portfolio of assets.

GrainCorp, based in Sydney, Australia, is involved in the receival, testing, transport, handling and storage of grain and other bulk commodities, as well as the exportation of wheat, barley and oilseeds, with a presence in North America, Europe, Australia, Africa, Asia and South America.

The company has a network of 280 storage facilities and its seven storage and loading facilities control more than 90% of eastern Australia’s bulk grain exports.