By Saabira Chaudhuri
Archer Daniels Midland Co. (ADM) has sweetened its takeover bid
for Australia's GrainCorp Ltd. (GNC.AU) by 3.8%, a deal that now
values the world's second-largest wheat exporter at about A$2.8
billion.
Archer is now offering GrainCorp shareholders A$12.20 a share in
cash, up from its October offer of A$11.75. Archer noted that the
new offer represents a 40% premium to the last closing price of
GrainCorp shares on the day before the initial offer was
unveiled.
Shareholders would keep the dividend of A$0.35 announced Nov.
15.
"Our proposal also offers more certainty, greater value and
immediate realization of potential future value for GrainCorp
shareholders than GrainCorp's standalone plan," Archer Daniels
Chief Executive Patricia Woertz said. She added that the revised
proposal takes into account GrainCorp's results for the year,
certain new initiatives and its recently announced ordinary and
special dividends.
Archer owns 19.9% of GrainCorp's shares, the maximum allowed
under the Australian Foreign Investment Review Board.
Last month, GrainCorp rejected Archer's offer, saying it
"materially undervalued" its business as it reported its
third-consecutive year of record profit--up 19% for the fiscal year
ended September.
In October, ADM reported its first-quarter earnings slumped 60%,
as tight U.S. grain supplies limited its grain-trading
opportunities and triggered losses in its ethanol business. Both
Fitch Ratings and Standard & Poor's placed ADM on watch for a
potential credit downgrade following the bid for GrainCorp, citing
concerns that the deal could increase the company's debt pile, and
Archer has since said it plans to sell its stake in Mexican corn
flour maker Gruma SAB (GMK) to help finance the deal.
ADM has also faced opposition from Australian politicians such
as Shadow Treasurer Joe Hockey. Critics fear international
companies will exploit Australia's natural resources without any
concern for the long-term impact.
Shares of ADM closed Friday at $26.70 and were inactive in
recent premarket trading. The stock has fallen 11% in the past
year. Meanwhile, shares of GrainCorp edged up four cents in recent
trading on the Australian Securities Exchange to A$11.94. The stock
has risen 62% in the past year.
--Caroline Henshaw contributed to this article.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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