CHICAGO, Ill. (Reuters) — Archer Daniels Midland Co.’s planned $2.8 billion acquisition of Australian grain handler GrainCorp Ltd. will likely be delayed until early next year.
ADM, one of the world’s top grain traders, also reported that adjusted third-quarter earnings fell as U.S. crop supplies remain tight following a historic U.S. drought last year.
“ADM’s fundamentals should improve, reflecting large global crop supplies and ongoing strong de-mand,” said Ken Zaslow, an analyst for BMO Capital Markets.
The GrainCorp acquisition is part of ADM’s strategy to expand globally and lead to increased exports to China and the Middle East. It is the latest move in the rapid consolidation of the global grain sector amid intense competition to feed fast-developing countries such as China.
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ADM had planned to complete the deal by the end of the year. It awaited approval from regulators in Australia and China, where GrainCorp has an edible oils facility.
Australian treasurer Joe Hockey said this month the deadline for a regulatory decision was extended to Dec. 17 because of the transaction’s size and “complex nature.”
“We expect closing to be some time in the first quarter of 2014,” said ADM chief operating officer Juan Luciano.
Last year’s U.S. drought hurt grain companies by slashing the volume of grain available for them to buy, sell, transport and process.
ADM’s net earnings for the third quarter rose to $476 million, or 72 cents per share, from $182 million, or 28 cents, a year ago, as an accounting credit lifted results.
Adjusted earnings were 46 cents per share, down from 53 cents in the same period a year ago. Analysts expected 47 cents, according to Thomson Reuters.
Profits in ADM’s core agricultural services business dropped by $152 million to $102 million, after adjusting for special charges a year ago.
Earnings from crop merchandising and handling declined by $104 million to $4 million as low U.S. crop supplies reduced export volumes and international merchandising was weak.
Revenue totalled $21.39 billion, down from $21.81 billion a year ago but above expectations of $20.62 billion.
