GrainCorp Agrees to $3 Billion Takeover Offer from ADM

GrainCorp, which is the biggest crop handler in eastern Australia, agreed to the $3 Billion takeover offer from Archer Daniels Midland. This brought GrainCorp shares to reach record level in Sydney Friday. The latest offer was the third since ADM first gave an offer in October 2012. GrainCorp

In acquiring GrainCorp, which is the only major publicly traded grain merchant in Australia after the country deregulated its wheat export system, would give ADM control of seven of the eight ports that deliver grain in bulk from Australia’s east coast. ADM would also have control of a malt producer.

The acquisition comes as the agricultural trading sector got a wave of unprecedented wave of consolidation over the past year and a half. Glencore purchased Viterra for $6.1 billion. Japan-based Marubeni has agreed to buy Gavilon for $5.3 billion, including its debt.

In 2012, ADM got 19.9 percent stake in GrainCorp to diversify supply sources as the grain shipments in the United States fell short. ADM agreed to pay A$12.20 per share in cash for the rest of GrainCorp. Shareholders will get A$1 per share in dividends.

Shares in GrainCorp went up 8 percent at A$12.80 at noon in Sydney. Last October, GrainCorp didn’t approve ADM’s original offer of A$11.75 a share. It said that the price didn’t reflect the value of the port and storage assets in Australia, which is the world’s second largest wheat exporter.

In December, ADM increased its offer to A$2.8 billion but GrainCorp rejected it. It said that the board’s view hasn’t changed.

GrainCorp remained as one of the few midsized international grain merchants left after the series of consolidations. The company handles 90 percent of eastern Australian’s bulk grain exports via its loading and storage facilities.

ADM’s acquisition of GrainCorp would be its largest deal ever. In February, ADM overcame the drought in the US to report higher profits in the last quarter of 2012. It got net earnings of $510 million, which was six times larger compared to the same quarter in 2011.