US-based agri-processing company Archer Daniels Midland (ADM) is close to complete the acquisition of Australia's largest grain exporter after GrainCorp accepted its A$2.8bn ($2.95bn) takeover bid.
Under the terms of the deal, ADM agreed to pay A$12.20 ($12.60) per share in cash to acquire GrainCorp. In addition, it will pay the GrainCorp shareholders a one-time A$1 per share special dividends, subject to due diligence, which takes the value of the deal to A$13.20 ($13.60) a share or A$3.4bn ($3.5bn) including GrainCorp's net debt.
ADM chairman and CEO Patricia Woertz said that GrainCorp is a leader in the Australian agribusiness sector.
"Should the offer proceed, the addition of GrainCorp to our global network would fit our strategy and help to further connect Australia's growers with growing global demand for crops and food, particularly in Asia and the Middle East," Woertz added.
ADM's offer is subject to several regulatory approvals, including China, where GrainCorp owns assets. However, if the regulatory conditions are not achieved by 1 October 2013, GrainCorp will pay shareholders an additional dividend of A3.5 cents per share for each month.
If successful, the acquisition of GrainCorp would be the largest purchase for ADM following its acquisition of W.R. Grace & Co.'s cocoa business for $470m in 1996. The acquisition bid by ADM is part of its strategy to strengthen its agricultural services and oilseeds businesses by investing in key supply regions outside the US.
Barclays and Citi are acting as financial advisors for ADM, while the Corrs Chambers Westgarth and Cravath, Swaine & Moore are advising GrainCorp.
GrainCorp, based in Sydney, Australia, is involved in the receival, testing, transport, handling and storage of grain and other bulk commodities, as well as the exportation of wheat, barley and oilseeds. The company operates a network of 280 storage facilities and its seven storage and loading facilities control more than 90% of eastern Australia's bulk grain exports.
