ARCHER Daniels Midland Co. (ADM) announced last week that it signed a takeover bid implementation deed with GrainCorp, Australia's largest grain handler, in a deal worth $3.4 billion (Australian).
The April 25 agreement between the two major players came just 133 days after GrainCorp publicly rebuffed ADM's advances for a second time in as many months.
Under the terms of the agreement, ADM would acquire GrainCorp for a cash offer valued at $12.20 per share, with GrainCorp shareholders earning a dividend of $1.00 per share from the proceeds at closing and an additional 3.5 cents per share for each month beyond Oct. 1 until closing of the transaction.
Over the course of six weeks last fall, ADM acquired a 19.8% stake in the Australian firm, becoming, by far, GrainCorp's largest shareholder. ADM paid an average of $11.24 per share for that stake, and on Dec. 4, 2012, ADM issued an offer to acquire the remainder of GrainCorp's shares for $12.20 -- an offer GrainCorp's leadership said, at the time, "materially undervalued" the operation (Feedstuffs, Dec. 17, 2012).
What a difference a quarter can make.
Following the December rejection, ADM essentially let the issue drop, at least publicly. Analysts speculated that GrainCorp's executives and directors were holding out for ADM to sweeten its offer -- something it had done once already -- or for another white knight to emerge with a better deal.
As the months passed, no such deal appeared, leaving GrainCorp right back where it started: with its largest shareholder offering a nearly 50% premium to its 2012 pre-takeover share price.
GrainCorp's directors now say they will unanimously recommend the offer to the shareholders pursuant to basic due diligence and no superior proposal materializing at the 11th hour.
GrainCorp is one of the leading agribusinesses in the Asia-Pacific realm, handling roughly 75% of Australia's annual grain production and 90% of eastern Australian exports, in addition to its major presence in malt, flour and edible oil production.
ADM delayed the release of its quarterly financial results by one day to accommodate the final day of its due diligence under the terms of the takeover implementation deed. It will announce its first-quarter results and its decision to proceed with the GrainCorp takeover May 1.