SYDNEY--Archer Daniels Midland Co. (ADM) is close to becoming
east Australia's largest grain exporter after GrainCorp Ltd.
(GNC.AU) accepted its $2.9 billion takeover bid, just months after
the Australian company rejected its offer as too low.
ADM agreed to pay 12.20 Australian dollars (US$12.60) cash per
share for GrainCorp, valuing the Sydney-based company at A$2.8
billion, both companies said in separate statements. GrainCorp
shareholders will also receive A$1 a share in dividends under the
deal, subject to due diligence, raising the total sum to A$13.20 a
share, or A$3.4 billion.
The deal will leave almost all of the grain-handling
infrastructure in Australia--one of the world's largest wheat
exporters and the beachhead to Asia's booming food markets--in the
hands of foreign companies. GrainCorp, a relic of Australia's
now-dismantled central wheat export board, owns seven of the eight
ports that ship around 90% of the grain from the country's east
coast.
"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," ADM Chief Executive Patricia Woertz said in a
statement.
ADM was twice spurned in its efforts to buy GrainCorp last year.
The Illinois-based company already owns a 19.9% stake in GrainCorp,
which it bought in October as it launched a succession of takeover
offers for the company.
Graincorp shares surged as much as 8.5% to A$12.88 on news of
the revised offer.
GrainCorp Chief Executive Alison Watkins said on a conference
call Friday that she'd received interest from other suitors but
declined to give more details. ADM has two days to match any higher
offer, she added.
"We know that GrainCorp is an attractive business with
attractive assets," she said. "The level of interest reflects those
assets and the strategic significance that we have."
Sujit Dey, at J.P. Morgan's specialist equities sales desk, said
the structure of the deal signalled that GrainCorp believed there
was a chance it may get another offer and showed how "desperate"
ADM was to take control of the Australian company.
"It is the first time that I can remember any deal where a break
fee is not in place," he said in a note to clients.
ADM's offer is subject to regulatory approval from several
authorities, including China, where GrainCorp owns assets. The
Ministry of Commerce of the Government of the People's Republic of
China took more than a year to approve Glencore International PLC's
merger with Xstrata PLC and is likely to be the slowest to give the
nod, GrainCorp's Ms. Watkins said.
Barclays PLC and Citigroup Inc. are advising ADM, while
Greenhill & Co. and Credit Suisse AG are advising
GrainCorp.
--Gillian Tan and Nathalie Tadena contributed to this
article
Write to Caroline Henshaw at caroline.henshaw@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires