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Proposal from ADM Shot Down by GrainCorp

Proposal from ADM Shot Down by GrainCorp

15 November 2012

ANALYSIS - GrainCorp Ltd., the largest grain handler in eastern Australia, has shot down an ADM proposal offering A$2.7 billion ($2.8 billion), citing that the ADM offer "materially undervalues GrainCorp", writes Sarah Mikesell, TheCropSite senior editor.

Allison Watkins, GrainCorp CEO, said the board will respond to any proposal that's in the best interest of the shareholders and remains committed to maximising value for shareholders.

If ADM were to secure the Sydney-based company, it would give them control of seven of the eight bulk grain ports on the east of Australia, the second largest wheat exporter in the world.

GrainCorp, who handles three-fourths of eastern Australia's grain crop, says it will also benefit from expectations of Australia to double it's agricultural exports by 2050.

On 22 October 2012, GrainCorp Limited announced it had received an indicative, nonbinding proposal from US-based ADM on 19 October 2012 to acquire the outstanding shares in GrainCorp at a price of $11.75 per share in cash.

GrainCorp has traded above ADM’s A$11.75 offer since the bid was made last month. GrainCorp closed 0.2 per cent higher today at A$12.20 in Sydney.

GrainCorp said it is confident in its outlook and strategy to continue to deliver shareholder value, underpinned by its:

  • Integrated business model across the grain supply chain;
  • Unique portfolio of grain storage and logistics assets, including the largest infrastructure network of grain storage sites and 7 of the 8 bulk ports in Eastern Australia;
  • Strategic global portfolio of grain processing assets, producing ~35 per cent of Australia's malt as the world's fourth-largest commercial malt producer; ~40 per cent of Australia's canola oil and refined edible oil; and ~35 per cent of Australia's flour as Australia's leading flour miller;
  • Global exposure to attractive industry fundamentals through its assets, which are strategically located to supply regions of demand growth, including the Middle East and Northern Africa and Asia;
  • Strong outlook and clear strategy including growth, asset optimisation and cost initiatives to deliver incremental underlying EBITDA of approximately $110 million over the next four years;
  • Track record of delivering against objectives.

Sarah Mikesell, Senior Editor

Sarah Mikesell, Senior Editor



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