ADM’s $2.8 billion offer for GrainCorp undervalues the Australian grain dealer in light of its “outstanding” annual results, according to the company’s chief executive.
Alison Watkins hailed GrainCorp’s record-breaking results and its “compelling” prospects after net profit surged 19% to A$205m in the year ending 31 August. The firm has identified a number of “growth initiatives” to increase underlying earnings by around A$110m over the next four years.
“We’ve looked at the underlying earnings for GrainCorp, the growth initiatives we are confident of delivering, and formed a view on fundamental value which is materially different from the ADM proposal,” said Watkins.
“The grain trade has doubled in the last 40 years, so has malt, and edible oils has tripled in the last 10 years. We expect this kind of demand to continue unabated. Australia is in the right place at the right time to participate in that growth," added Watkins.
US company ADM, which already owns a 14.9% stake in GrainCorp, said that it remains confident that the offer represents good value for shareholders.
“The offer represented a significant premium to the prevailing GrainCorp share price at the time of our approach. We believe it remains an attractive proposal,” said ADM in a statement.
