Following two unsuccessful attempts,
Archer Daniels Midland Co.
), has finally cracked a deal to acquire Australia's leading
agribusiness, GrainCorp Limited. After much deliberation, the two
companies entered a pact wherein GrainCorp has consented to
Archer Daniels' raised takeover bid of A$3.4 billion, including
Per the latest agreement, Archer Daniels has received permission
to conduct due diligence on GrainCorp for seven days, following
which the company will decide whether the deal will carry forward
or be terminated. The company will announce the results of due
diligence along with the first-quarter earnings scheduled to
release on May 1. Further, the deal is conditioned upon receiving
regulatory approvals or waivers by Dec 31, 2013.
Conditioned upon the positive results from the due diligence,
Archer Daniels has proposed to pay A$12.20 per share for all
outstanding shares of GrainCorp. Moreover, if the deal proceeds,
GrainCorp will pay its shareholders a dividend of A$1.00 per
share before the completion of the takeover.
In case the regulatory approvals are delayed beyond Oct 1,
2013, the company will pay its shareholders an additional
dividend of A3.5 cents per share from its profits, every month,
starting from Oct 1 till the approvals are received or waived
The American agribusiness giant already holds 19.8% stake in the
Australian agri-products dealer, acquired for an average of
A$11.24 per share.
Earlier, Archer Daniels had made an initial bid of A$11.75 per
share in Oct 2012 and later raised the bid by 3.8% to A$12.20 per
share in Dec 2012. At the time of the initial offering made in
October, Archer Daniels had about a 14.9% interest in the
Australian farm products dealer.
Archer Daniels' interest in acquiring GrainCorp is in sync with
its ongoing portfolio management initiative. Archer Daniels'
strategy focuses on expanding its Agricultural Services and
Oilseeds businesses across the globe by investing in key supply
areas beyond national borders.
Apart from making way for the company's strategy of
solidifying its global footprint in the key agricultural regions
via acquisitions and joint ventures, the buyout is expected to
help Archer Daniels to fortify its financial position.
Moreover, Archer Daniel's union with GrainCorp is expected to
position the latter well to broaden its scope, by channeling
Australia's farm produce to meet the growing demand for crops and
food in the global markets, particularly Asia and the Middle
Currently, Australia's agricultural business presents an
overwhelming opportunity for agri-based companies, which seek
expansion opportunities. Australia is a major exporter of many
commodities, from minerals such as iron ore to agricultural goods
Archer Daniels Midland procures, transports, stores, processes,
and merchandises agricultural commodities and products in the
United States and internationally. The company has three major
business segments: Oilseeds Processing, Corn Processing, and
The company's prime competitors include Cargill Inc.,
Tyson Foods Inc.
). The company currently has a Zacks Rank #3.
ARCHER DANIELS (ADM): Free Stock Analysis
BUNGE LTD (BG): Free Stock Analysis Report
INGREDION INC (INGR): Free Stock Analysis
TYSON FOODS A (TSN): Free Stock Analysis
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