Australia’s GrainCorp rejects ADM’s revised takeover bid

Australian grain handler GrainCorp has rejected a higher acquisition bid from US-based agri-processing company Archer Daniels Midland (ADM), saying that the A$2.8bn ($2.95bn) offer did not represent its portfolio of assets.

In a statement, the company said that the revised offer of A$12.20 ($12.85) per share in cash has not changed the board’s view that the proposal materially undervalued the company.

"GrainCorp’s Board will be constructive in any dealings in relation to proposals that have the potential to be in the best interests of shareholders," added the company.

In October, ADM made an offer to acquire GrainCorp for A$11.75 ($12.38) per share, in a deal valued at A$2.7bn ($2.84bn), and increased its stake in GrainCorp from 4.9% to 14.9%. GrainCorp, however, rejected the offer in November, stating that the bid was too low.

In December, ADM raised its offer by 3.8% to A$12.20 ($12.85) per share, and boosted its stake in GrainCorp from 14.9% to 19.9%, with the objective of arriving at an agreement with GrainCorp’s board of directors.

Commenting on the development, ADM spokesperson Jackie Anderson said that its revised offer reflects the value of GrainCorp’s business and provides more certainty, higher value and immediate realisation of potential future value for GrainCorp shareholders.

"We intend to consider all our options with respect to GrainCorp and our 19.9% shareholding," Anderson added.

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.

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’s seven storage and loading facilities control more than 90% of eastern Australia’s bulk grain exports.