ADM to acquire Australia’s GrainCorp for $3.5 billion

by Keith Nunes
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SYDNEY, AUSTRALIA — Archer Daniels Midland Co. has entered into an agreement to acquire GrainCorp Limited for A$12.20 per share ($12.54) pending the results of a seven-day due diligence period. If the results of the due diligence are satisfactory and ADM moves ahead with the agreement, the total value of the transaction will be approximately A$3.4 billion ($3.5 billion).

“We are pleased to have reached agreement with GrainCorp to conduct due diligence and, subject to that due diligence, put a recommended offer before GrainCorp’s shareholders,” said Patricia Woertz, chairman and chief executive officer of ADM. “We anticipate that the offer will be cash accretive in the first full year and will meet our key financial objectives.

“GrainCorp is a leader in the Australian agribusiness sector. Should the offer proceed, the addition of GrainCorp to our global network would fit our strategy and help to further connect Australia’s growers with growing global demand for crops and food, particularly in Asia and the Middle East. ADM and GrainCorp have complementary geographies with little overlap and highly compatible cultures. We look forward to working with the GrainCorp team and Australian growers to build on their history of success.”

If the ADM offer proceeds, and is successfully completed, GrainCorp shareholders will receive A$13.20 per share, comprising a cash payment of A$12.20 per share under the ADM offer and dividends totaling $1 per share. GrainCorp’s board has indicated it will support the agreement as long as a there is not another offer that is deemed superior; an independent expert determines that ADM’s offer is fair and reasonable; and that regulatory conditions are met or waived by Dec. 31, 2013.

“The GrainCorp board believes that the ADM offer highlights the strategic value of our business and unique assets, the program of strategic initiatives being undertaken and GrainCorp’s enviable proximity to the fast growing Asian markets,” said Don Taylor, chairman of GrainCorp.

This is the third time ADM has tried to enter into an agreement to acquire GrainCorp. In late October ADM offered A$11.75 per share and was rejected by the company’s board. In December ADM offered A$12.20 per share, but was again rejected with GrainCorp saying the offer undervalued the company.
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