ARCHER Daniels Midland Co. (ADM) made it clear Dec. 3 that it is serious about its campaign to acquire Australian grain handler GrainCorp when it gobbled up another 5% stake in the firm.
Now holding 19.9% of GrainCorp's outstanding shares, ADM upped its offer to $12.20 (Australian) per share, an increase from $11.75 in its initial bid to buy the company (Feedstuffs, Oct. 22).
On Dec. 3, ADM announced both its additional stake in GrainCorp and its fattened offer -- now with a value as high as $2.9 billion -- saying it is ready to do business immediately should GrainCorp come to the table willing to talk.
"We consider that our revised, non-binding proposal reflects the value of GrainCorp's business, taking into account GrainCorp's 2012 results, its new initiatives announced on Nov. 15 and its recently announced ordinary and special dividends totaling 35 cents (Australian). Our proposal also offers more certainty, greater value and immediate realization of potential future value for GrainCorp shareholders than GrainCorp's stand-alone plan," ADM chair and chief executive officer Patricia Woertz said.
"ADM is a disciplined buyer, and any combination with GrainCorp must meet our key financial hurdles, taking into consideration the impact of the Australian agricultural cycle on GrainCorp's earnings power," she added.
Sources indicate that GrainCorp's board is holding out for at least $13 per share, having publically rebuffed ADM's initial overtures (Feedstuffs, Nov. 19) and reportedly not having met with ADM leadership since initial talks in October.
ADM's interest in the company precipitated a rally in GrainCorp's share price following the October announcement. Those shares closed at $12.32 last Wednesday in Sydney, Australia, a 39% run-up in six-weeks' time.
In its announcement of the new bid, ADM said its offer represented a 45.9% premium to the 12-month, volume-weighted average GrainCorp share price of $8.36 (Australian) through Oct. 18.
Responding to the higher offer, GrainCorp simply noted that it had, indeed, received the offer, along with a list of ADM's conditions relative to due diligence and regulatory approvals, and that its board would review the offer and "advise the market in due course."