ADM raises stake in, seeks to acquire GrainCorp
Oct. 19, 2012
by Josh Sosland
DECATUR, ILL. -- Archer Daniels Midland Co. said Oct. 19 it has raised its ownership of GrainCorp Litd. to 14.9% from 4.9% and is seeking to purchase the entire business. The company said it upped its holdings through a purchase of additional shares at a price of A$11.75 ($12.14) per share.
ADM said it has approached GrainCorp to negotiate a cash acquisition of the company. If an agreement is reached, it would be subject to the completion of “satisfactory due diligence” as well as regulatory approvals and other conditions, ADM said
“Our investment in GrainCorp is part of our ongoing portfolio management and is consistent with our strategy of growing our Agricultural Services and Oilseeds businesses by investing in key supply regions outside the U.S.,” said ADM chairman and chief executive officer Patricia Woertz. “GrainCorp is a well-managed company, and together with ADM would be better positioned to connect Australia’s farmers with growing global demand for crops and food, particularly in Asia and the Middle East. We anticipate that an ADM acquisition of GrainCorp would meet ADM’s key financial hurdles.”
Shares of GrainCorp. Ltd. trade on the Australia Stock Exchange. Based in Sydney, the company has a market capitalization of $1.8 billion.
Requesting a trading halt from the exchange, the company issued a statement saying it “confirms that it has received no formal proposal. Should GrainCorp receive a proposal from ADM, the Board will review the proposal as well as other options to maximize value for GrainCorp shareholders.”
GrainCorp is an agribusiness providing services that include grain receiving, handling and storage, malt production for the brewing and distillery industries, flour milling and grain marketing and trading, including activities in domestic and international markets. The company operates in three core geographies of Australia, North America and Europe and focuses on three core grains – wheat, barley and canola.
The company’s businesses in North America include Canada Malting Co., Great Western Malting, Brewcraft and Country Malt. GrainCorp was established in 1992 with the privatization of the Australian Wheat Board.