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GrainCorp rejects ADM’s takeover bid as full-year profits soar

By Kacey Culliney , 15-Nov-2012

ADM's offer 'materially undervalues' GrainCorp
ADM's offer 'materially undervalues' GrainCorp

Australian commodity giant GrainCorp rejected ADM’s $2.8bn takeover bid stating it ‘materially undervalues’ the business.

The rejection came as the grains firm posted a net profit of A$205m for 2012.

GrainCorp received ADM’s $2.8bn (A$2.7bn) takeover offer on October 22 (see HERE ) but today said it had reviewed and rejected the bid.

"The GrainCorp board has determined that the proposal materially undervalues GrainCorp and has advised ADM accordingly,” it said.

ADM acknowledged the rejection but stood by its offer.

Jackie Anderson, spokesperson for the US grains processor, said: “We approached GrainCorp’s board with a proposal that represented a significant premium to the prevailing GrainCorp share price at the time of our approach. We believe it remains an attractive proposal.”

Shares strengthened, sturdy profits

ADM’s full takeover offer came after the US firm upped its shares in GrainCorp by 10% to 14.9% at a price of A$11.75 (US$12.16).

Following the lodging of ADM’s takeover bid, GrainCorp shares soared in Sydney, closing at A$12.30 (US$12.73) on Monday 22 October.

Today, in its 2012 full-year results for the fiscal year ended 30 September, net profits were pegged at A$205m, up 19% on the previous year.

GrainCorp’s managing director and CEO, Alison Watkins, said the financial performance had been driven by strong volumes, amplified by progress in capturing value from the firm’s integrated assets and global operations.

Pushing forward

Watkins reiterated that the firm would remain dedicated to its four-year growth initiative that aims to deliver A$110m incremental underlying EBITDA (earnings before interest, taxes, depreciation and amortization).

“GrainCorp has solid and sustainable growth across all business units and a track record of delivering on our strategy. Our targets are underpinned by strong global fundamentals, where our infrastructure is strategically located in proximity to the world’s major growth markets for quality grains: Asia, the Middle East and Africa,” she said.

The grains giant finalized it’s A$472m (US$488.8m) acquisition of Integro and Gardner Smith last month – a move that established an edible oils arm to the business.

GrainCorp is Australia’s leading flour miller, producing around 35% of the country’s flour. It is also the world’s fourth-largest commercial malt producer and yields about 40% of Australia’s canola and refined edible oil.

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