ADM has raised its offer for GrainCorp by 3.7% to $2.9 billion after a previous bid was rejected by the Australian firm.
In October, GrainCorp said that ADM’s bid of A$11.75 per share undervalued the company. The new offer represents a 40% premium on GrainCorp’s closing share price of A$8.74 on 18 October.
Last month, GrainCorp reported an 18% in increase in EBITDA to A$414 million for the year ending 30 September.
ADM has also acquired a further 5% of GrainCorp’s outstanding shares for A$12.20 per share. The Illinois-based firm has received the green light from the Australian Foreign Investment Review Board to acquire up to 19.9% of GrainCorp’s shares.
“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 15 November, and its recently announced ordinary and special dividends totaling A$0.35,” said Patricia Woertz, ADM’s chairman and chief executive.
“Our proposal also offers more certainty, greater value and immediate realisation of potential future value for GrainCorp shareholders than GrainCorp’s stand-alone plan.”
ADM’s pursuit of GrainCorp is an attempt to internationalise its grain business – the firm currently earns 50% of its income in the US. ADM also believes that GrainCorp is well positioned to capitalise on the growth of the middle classes in Asian economies and increased demand for certain foods.
