By Nathalie Tadena
Agricultural giant Archer Daniels Midland Co. (ADM) has signed a
takeover bid implementation deed with GrainCorp Ltd. (GNC.AU),
under which it has agreed to make a cash offer of A$12.20 a share
to acquire the Australian company after it conducts due
diligence.
The agreement allows ADM, which currently owns a 19.8% stake in
GrainCorp, to undertake due diligence on GrainCorp for a seven-day
period, after which the company will disclose whether the potential
offer will proceed or the agreement will be terminated. ADM said
this announcement will occur prior to its first-quarter earnings
call on May 1.
If the deal proceeds, ADM will put forward the takeover bid to
GrainCorp shareholders. GrainCorp said the takeover bid would be
unanimously recommended by its board, as long as there is no
superior proposal.
The potential offer implies an aggregate value of A$3.4 billion,
including GrainCorp's net debt.
"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," said ADM Chairman and
Chief Executive Patricia Woertz.
Under the terms of the agreement, GrainCorp will pay dividends
of A$1 a share to its shareholders prior to the closing of the
acquisition.
If the regulatory conditions aren't achieved by Oct. 1,
GrainCorp will pay an additional dividend of A3.5 cents per share
for each full month between Oct. 1 and the satisfaction or waiver
of regulatory conditions, subject to GrainCorp being profitable
over that period.
ADM had twice been spurned in previous efforts to acquire
GrainCorp. The company in October launched its bid to acquire
GrainCorp to gain access to its grain storage and ports on
Australia's east coast, the beachhead for exporting grain to China
and the rest of Asia. ADM has sold stakes in Gruma SAB (GMK,
GRUMA.MX) and several of its units for $450 million, with proceeds
earmarked to pay for the GrainCorp deal.
ADM expects the offer to be cash accretive in the first full
year and will meet its key financial objectives.
ADM shares were off by 12 cents at $33.06 after hours. The stock
is up 21% since the start of the year.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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