ADM increases bid for GrainCorp to $2.9 billion

December 5, 2012

According to Reuters, Archer Daniels Midland Co. has increased its bid for GrainCorp Ltd. to $2.9 billion and buying more shares. GrainCorp is the last available independent grain asset of scale in Australia, the world’s second-largest wheat exporter and an attractive market due to stable policies and good links to Asia. ADM, which is looking to increase its geographical spread, upped its offer by 3.8% from A$11.75 per share to A$12.20 per share in cash. The new proposal sent GrainCorp shares up 3% to A$12.32, suggesting investors may hold out for a higher offer.

GrainCorp noted the “revised, non-binding and conditional proposal” and said it would advise the market in due course, while again highlighting its portfolio of strategic assets. GrainCorp, which took in 12.2 million tons of grain last season, rejected ADM’s earlier $2.8 billion bid, saying it undervalued the company after a bumper harvest delivered a record annual net profit.

ADM said the new proposal reflected the value of GrainCorp’s business, taking into account its 2012 results, new initiatives, and a dividend announced on Nov. 15. Including that final dividend of 35 cents per share, ADM said its new offer was worth A$12.55 per share.

ADM revealed it had acquired an additional 5% of GrainCorp for the new offer price, raising its stake to 19.9%—the limit under Australian takeover laws before it must make a bid for the entire company.

Reuters article

ADM press release

GrainCorp press release