SYDNEY, AUSTRALIA — Archer Daniels Midland Co. on Dec. 3 increased its bid for GrainCorp Limited to $2.9 billion, from the $2.8 billion it proposed in October. GrainCorp rejected that offer on Nov. 14, saying it undervalued the company.
ADM’s new proposal offers A$12.20 per share in cash, with shareholders keeping the dividend of A35¢ announced on Nov. 15.
ADM’s revised non-binding proposal is subject to GrainCorp granting ADM access to conduct confirmatory due diligence, completion of that due diligence satisfactory to the ADM board, and a recommendation from the GrainCorp board. ADM is ready to commence due diligence immediately and expeditiously. Any agreement to acquire GrainCorp shares would also be subject to limited conditions, which are available at on the company website
“We consider that our revised non-binding proposal reflects the value of GrainCorp’s business, taking into account GrainCorp’s 2012 results, its new initiatives announced on Nov. 15, and its recently announced ordinary and special dividends totaling A35¢. Our proposal also offers more certainty, greater value and immediate realization of potential future value for GrainCorp shareholders than GrainCorp’s stand-alone plan,” said ADM Chairman and Chief Executive Officer Patricia Woertz. “ADM is a disciplined buyer, and any combination with GrainCorp must meet our key financial hurdles, taking into consideration the impact of the Australian agricultural cycle on GrainCorp’s earnings power.”
The revised non-binding proposal represents1:
•           A 39.6% premium to the last closing price of GrainCorp shares of A$8.74 on Oct. 18;
•           A 38.8% premium to the one-month, volume-weighted average GrainCorp share price of A$8.79 up to Oct. 18;
•           A 35.7% premium to the six-month, volume-weighted average GrainCorp share price of A$8.99 up to Oct. 18; and
•           A 45.9% premium to the twelve-month, volume-weighted average GrainCorp share price of A$8.36 up to Oct. 18.
As of Dec. 3, ADM held an economic interest in a total of 19.9% of GrainCorp shares. Since Oct. 18, ADM had held an economic interest in 14.9% of GrainCorp, and on Monday evening ADM acquired an additional 5% of GrainCorp’s outstanding shares for cash at a price of A$12.20 per share. ADM has received approval from the Australian Foreign Investment Review Board to acquire up to 19.9% of the shares in GrainCorp.