Seeking Alpha

ADM still eyeing GrainCorp takeover, Australian broker says

  • Talk that a takeover of GrainCorp (GRCLF) is still a possibility has lifted the share price of the Australian grain handler, as broker Bell Potter believes the stock will continue to incorporate a takeover premium in its price even though the company itself is "overvalued."
  • Archer Daniels Midland's (ADM) A$2.8B bid for GrainCorp last year was rejected by the Australian government in November, saying a takeover would go against the national interest, but Bell Potter says GrainCorp is pricing in a 50% chance that ADM will return with a bid.
  • Not everyone is so optimistic; J.P. Morgan believes a deal is unlikely due to the political cost of allowing a foreign takeover, as well as the reduced strategic value of GrainCorp’s assets.
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