The Investment Doctor
Stephen Simpson, CFA
Jun. 23, 2014, 2:48 PM
- 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.
Nov. 15, 2013, 2:28 AM
- Australian Prime Minister Tony Abbott may reportedly veto Archer Daniels Midland's (ADM) A$2.2B ($2.1B) acquisition of crop handler GrainCorp (GRCLF) or impose conditions that would make the deal unviable.
- The ruling coalition is divided over the transaction, with some members, including Deputy Prime Minister Warren Truss, opposing it on the grounds of national interest. Wheat growers across Australia are also against the deal.
- The decision is the first big test of Abbott's declaration that Australia is "open for business."
Oct. 4, 2013, 6:05 PM
- Archer Daniels Midland (ADM) will find out whether it has received approval from Australia’s Foreign Investment Review Board for its planned A$3B acquisition of GrainCorp (GRCLF.PK) in about two months, Australia’s treasurer says.
- GrainCorp shares closed today at A$12.35/share, a 6.4% discount to the A$13.20 shareholders would receive under ADM’s buyout offer, perhaps an indicator that investors are skeptical the deal will be completed.
- Sizable deals that have been blocked by Australia’s FIRB in the past include the Singapore Exchange's proposed 2011 A$8.4B takeover of the Australian Stock Exchange and Shell's 2001 attempt to buy Woodside Petroleum for A$10B.
- Separately, Illinois Gov. Pat Quinn says he will veto any legislation with special tax incentives for ADM to keep its global headquarters in the state until legislators approve a fix for the pension crisis.
Jun. 24, 2013, 9:29 AM
Archer Daniels Midland (ADM) is a step closer to taking over GrainCorp (GRCLF.PK) after directors of Australia's largest grains handler urge shareholders accept a $3B offer. Under the deal, shareholders would receive $13.20/share, or ~$0.30 premium on GrainCorp's latest price.| Jun. 24, 2013, 9:29 AM
May 1, 2013, 5:56 PM
Apr. 26, 2013, 6:12 PM
Analysts and investors largely support ADM's $3B deal for GrainCorp, which would give it access to grain storage and ports on Australia's east coast, the beachhead for exporting grain to Asia. The acquisition would make ADM's fortunes less dependent on U.S. weather and ethanol prices, but questions remain about financing terms for the deal and cost savings that would come from the combination.| Apr. 26, 2013, 6:12 PM
Apr. 26, 2013, 3:06 AM
Australian grain exporter GrainCorp (GRCLF.PK) has accepted an increased takeover offer of A$3B ($3.1B) from Archer Daniels Midland (ADM) following a six-month courtship. ADM has agreed to pay A$12.20 a share and a dividend of A$1 a share. Should the company buy GrainCorp - the deal is subject to due diligence - ADM will gain control of seven out of eight ports that facilitate the bulk shipping of grain from Australia's east coast. (PR)| Apr. 26, 2013, 3:06 AM
Dec. 20, 2012, 3:49 AM
GrainCorp (GRCLF.PK) remains open to bids higher than Archer Daniels Midland's (ADM) latest A$2.8B ($2.9B) proposal - which the Australian company has rejected - and will hold further talks with the U.S. grain trader. "We've had records almost through the businesses, and now we are the prettiest girl in town," says director Peter Housden.| Dec. 20, 2012, 3:49 AM
Dec. 15, 2012, 3:51 PMWith Archer Daniels Midland (ADM) seeking cash to seal a purchase of Australia's GrainCorp (GRCLF.PK), Mexican corn flour and tortilla concern Gruma (GMK) is repurchasing stakes in itself from ADM for $450M. Family-controlled Gruma is borrowing $400M in one-year bridge loans to finance the buyback. | Dec. 15, 2012, 3:51 PM | 3 Comments
Dec. 14, 2012, 12:11 PM
Archer Daniels Midland (ADM) could lift its already sweetened A$12.20/share offer for GrainCorp (GRCLF.PK) to as much as A$13.05 (A$3B), with a minimum A$12.65 needed to gain board support, a J.P. Morgan analyst calculates. The price range also wouldn't materially impact ADM’s funding capability or its credit position beyond the expected one notch downgrade from the original offer.| Dec. 14, 2012, 12:11 PM
Dec. 3, 2012, 5:45 PM
Archer Daniels Midland's (ADM) sweetened bid for Australia's GrainCorp (GRCLF.PK) is "still not enough for the irreplaceable nature of GrainCorp’s assets,” an RBS Morgans analyst says. The revised offer represents an EV/EBITDA multiple of 8.5x, well below an average agribusiness acquisition multiple of 9.5x-9.7x, the firm says.| Dec. 3, 2012, 5:45 PM | 1 Comment
Dec. 3, 2012, 8:10 AM
Archer Daniels Midland (ADM) raises its takeover offer for GrainCorp (GRCLF.PK) to A$12.20 ($12.73) per share in cash, up from a rejected earlier bid of A$11.75. ADM says it acquired an additional 5% of GrainCorp for the new offer price, raising its stake in the Australian grains handler to 19.9%.| Dec. 3, 2012, 8:10 AM
Oct. 24, 2012, 4:51 PMArcher Daniels Midland (ADM) reaches a tentative deal to sell its 23% stake in Gruma SAB, the world's biggest corn flour and tortilla maker, to a Mexican businessman. The planned sale comes as ADM tries to buy GrainCorp for ~$2.8B, and it could help raise cash to avoid a hit to its credit rating that might result from a costly acquisition. | Oct. 24, 2012, 4:51 PM
Oct. 24, 2012, 6:00 AMDeutsche Bank (DB) has built up a 5.2% holding in GrainCorp, which is the subject of a $2.8B bid from Archer Daniels Midland (ADM). Given that Deutsche has been buying shares since June, the likelihood is that the move is for investment purposes rather than on behalf of a rival suitor. Still, observers expect a bidding war for GrainCorp, with Bunge and Cargill named in dispatches. | Oct. 24, 2012, 6:00 AM
Oct. 19, 2012, 3:51 AM
Archer Daniels Midland (ADM) buys a 10% stake in Australia's GrainCorp and wants to start talks about acquiring the whole company, although analysts reckon ADM could get caught up in a bidding war. The U.S. grain trader purchased the shares in the market at A$11.75 ($12.17) each, or a 33% premium to Thursday's close, with the price giving GrainCorp a valuation of A$2.7B. (PR)| Oct. 19, 2012, 3:51 AM