Executives with Australian grain handling and processing company GrainCorp have rejected a bid by Archer Daniels Midland to acquire the company for an estimated $2.7 billion.
ADM, based in Decatur Illinois, approached the Australian company in mid-October with an offer to buy all outstanding GrainCorp shares for $11.75 per share.
Last week, GrainCorp chief executive Alison Watkins said the GrainCorp board had examined the offer and determined that the ADM proposal “materially undervalues GrainCorp.”
“We’ve had a good hard look at the ADM proposal and we’ve given it very serious consideration,” Watkins said on a televised interview in Australia.
“We’re very confident that the proposal materially undervalues GrainCorp. So I think by announcing …(the rejection), we’ve given our shareholders a really good current understanding of the fundamental value of GrainCorp.”
ADM already holds a 14.9 percent stake in GrainCorp.
GrainCorp shares, which were trading at around $8.85 Aus before the ADM bid, have since peaked at around $12.69.
Shares gained 15 cents Nov. 19 to close at $12.35 following news of the rejection.
Watkins said the company will continue to move forward and focus on maximizing shareholder value by expanding the company, optimizing assets and increasing profitability.
GrainCorp owns an extensive network of grain collection facilities, processing plants and grain export terminals in Australia, primarily in the eastern states of New South Wales and Queensland.
According to a GrainCorp news release, the company owns seven of eight bulk grain export terminals on Australia’s east coast.
Those facilities handle nearly 90 percent of Australian bulk grain exports shipped from eastern ports.
It also produces approximately 35 percent of the country’s malt and 40 percent of canola oil and is Australia’s largest flour miller.
GrainCorp also owns a collection of malting companies in North America, including Canada Malting Company, which operates malting plants in Calgary, Thunder Bay and Montreal.
Canada Malt owns nine country elevators on the Canadian Prairies, with locations in Bawlf, Bieseker and Niobe, Alta., Leross, Watrous and Wapella, Sask., and Mariapolis and Norman, Man.
ADM responded to the GrainCorp rebuff with a short statement issued Nov. 14.
“(Our offer) represented a significant premium to the prevailing GrainCorp share price at the time of our approach,” ADM said.
“We believe it remains an attractive proposal.”