Archer Daniels Midland has snapped up a share of Australian bulk grains firm GrainCorp and has requested further discussions for a ‘potential transaction’.
According to media reports, including the Financial Times, ADM is said to have bought a 10% stake in the grains company and is gearing up for a full take-over bid worth $3bn.
GrainCorp has applied for a trading halt until Tuesday 23 October in light of the share buy and proposed talks.
The firm is one of Australia’s last remaining independent grain traders with more than 280 grain elevators in Australia boasting up to 20m tons of storage capacity. It buys and sells more than 4.5m tons of wheat, barley, sorghum and canola each year to local and international customers.
“GrainCorp notes it has been advised by Archer Daniel Midlands (ADM) that ADM has acquired a stake in the company and wished to engage in discussions with GrainCorp concerning a potential transaction,” it said.
However, it confirmed it has received no formal proposal from ADM at this stage.
“Should GrainCorp receive a proposal from ADM, the Board will review the proposal as well as other options to maximize value for GrainCorp stakeholders,” it continued.
Solid grains firm
In May, GrainCorp reported strong earnings for the first half of 2012, “driven largely by higher earnings from storage, handling and ports activities”.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was A$235m – up 36% on the year before.
Alison Watkins, CEO of GrainCorp, had said the strong performance could be owed to its strategic focus on deriving value from all points along the grain chain.