HONG KONG-The board of GrainCorp, one of Australia’s biggest grain processors, on Friday accepted a sweetened takeover bid worth 2.6 billion Australian dollars ($2.7 billion) from the U.S. agricultural business giant Archer Daniels Midland.
A.D.M., based in Decatur, Illinois, finally proved successful after two of its previous offers were rejected by GrainCorp’s board as having materially undervalued the company, which processes wheat, flour, barley, malt and edible oils. By its own estimates, GrainCorp handles 75 percent of eastern Australia’s annual grain production, and 90 percent of that region’s bulk grain exports.
The acquisition will help the American company to expand its international footprint and tap rising demand from growing and increasingly wealthy countries in Asia, including China â€" a top export market for Australian agricultural products.
A.D.M., which had already acquired 14.9 percent of the Australian firm, made a cash offer in October worth 11.75 Australian dollars per GrainCorp share, which was rebuffed. A follow-up bid of 12.20 dollars per share was rejected by GrainCorp in December.
The U.S. company finally won over GrainCorp’s board on Friday with a sweetened bid worth 12.20 dollars in cash for each share not already owned by A.D.M., plus an additional cash dividend payout of 1 dollar per share. The total buyout package values GrainCorp at 2.79 billion dollars, not including the dividend payment of around 200 million dollars.
Shares in GrainCorp closed 7.9 percent higher at 12.81 dollars in Sydney on Friday.
Under the terms of the deal, GrainCorp is to open its books to A.D.M. over the next week, and the U.S. company has until May 2 to confirm its offer. The deal would then be put to shareholders of the Australian company, requiring majority approval to proceed.
The takeover is also subject to regulatory approvals from Australia’s Foreign Investment Review Board and China’s Ministry of Commerce, which enforces the nation’s anti-monopoly law.
Credit Suisse and Greenhill are the financial advisers to GrainCorp.
