GrainCorp says ADM offer undervalued

by World Grain Staff
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SYDNEY, AUSTRALIA — GrainCorp Limited said on Nov. 14 that it has rejected a proposal by Archer Daniels Midland (ADM) to acquire outstanding shares of GrainCorp, saying the offer materially undervalues the company.
ADM made a nonbinding proposal on Oct. 19 to buy the outstanding shares of GrainCorp for A$11.75 per share. The proposal was subject to a number of conditions including due diligence, exclusivity and approval by the ADM board. 
GrainCorp said its board, together with its advisers, has reviewed and assessed the merits of the proposal.
GrainCorp said it is confident in its outlook and strategy to continue to deliver shareholder value, underpinned by its:
• Integrated business model across the grain supply chain;
• Unique portfolio of grain storage and logistics assets, including the largest infrastructure network of grain storage sites and seven (of the eight) bulk ports in Eastern Australia;
• Strategic global portfolio of grain processing assets, producing ~35% of Australia’s malt as the world’s fourth-largest commercial malt producer; ~40% of Australia’s canola oil and refined edible oil; and ~35% of Australia’s flour as Australia’s leading flour miller;
• Global exposure to attractive industry fundamentals through its assets, which are strategically located to supply regions of demand growth, including the Middle East and Northern Africa and Asia;
• Strong outlook and clear strategy including growth, asset optimisation and cost initiatives to deliver incremental underlying EBITDA of approximately $110 million over the next four years;
• Track record of delivering against objectives.
Based on the above, the GrainCorp board has determined that the proposal materially undervalues GrainCorp and has advised ADM accordingly.
ADM Spokesperson Jackie Anderson said it approached GrainCorp’s board with a proposal that represented a significant premium to the prevailing GrainCorp share price at the time.
“We believe it remains an attractive proposal,” she said.
GrainCorp reported on Nov. 14 a 19% increase in net profit for the fiscal year ended Sept. 30. It also outlined its strategic plan that it said will deliver EBITDA of A$110 million by the end of fiscal year 2016.
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