ADM’s initial A$2.7bn ($2.81bn) takeover offer made on October 19 was rejected by GrainCorp in light of solid full-year results that the Australian firm said made clear the offer materially undervalued the business.
At the time, ADM stood by the offer stating it remained an “attractive proposal”; however in a U-turn move, it upped its offer yesterday to A$2.81bn ($2.9bn). It has offered A$12.20 ($12.71) per share compared to the initial A$11.75 ($12.26) per share.
At the same time on Monday evening in Australia, ADM upped its shares in the Australian firm by 5% to 19.9% at a cost of A$12.20 per share.
GrainCorp said it will review the revised non-binding proposal and advise the market in due course. It added that it remains confident in its outlook and strategy to continue to deliver shareholder value.
However, Patricia Woertz, chairman and CEO of ADM, argued: “Our proposal also offers more certainty, greater value and immediate realization of potential future value for GrainCorp shareholders than GrainCorp’s stand-alone plan.”
Woertz said the new non-binding proposal reflects the value of GrainCorp’s business and takes into account its 2012 results, newly announced initiatives and its recently announced ordinary and special dividends totalling A$0.35.
GrainCorp pulled in net profits of A$205m ($213.9m) for the year ended 30 September, up 19% on the previous year.
Its managing director and CEO, Alison Watkins, said the firm remains dedicated to its four-year growth initiative that aims to deliver A$110m ($114.9m) incremental underlying EBITDA (earnings before interest, taxes, depreciation and amortization).
GrainCorp is one of 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.
It is also one of the country's last remaining grain traders that is now up for possible sale to a foreign investor.
A study last year from Citi Investment Research analyst Tim Mitchel, estimated that foreign investments of more than $12bn have been made in Australia’s agricultural businesses and land in the last four years.