GrainCorp confirms $2.7bn takeover bid
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Nicholas Grove is a Morningstar journalist.
GrainCorp (GNC) on Monday confirmed receipt of a takeover offer from US agribusiness giant Archer Daniels Midland (ADM) that values the Australian grains handler at about $2.7 billion.
The confirmation follows a raid of GrainCorp's share register on Friday, when ADM took a 14.9 per cent stake in the company. Prior to the raid, ADM held a 4.9 per cent stake in GrainCorp.
GrainCorp said its board is reviewing the proposal and "has not yet formed a view on its merits and will keep the market informed of any material developments".
"GrainCorp has a unique portfolio of integrated, strategic assets and is confident in its outlook and strategy to continue to deliver shareholder value," the company said in a statement.
"GrainCorp will provide a detailed update on the performance and outlook of the business at its upcoming results announcement."
GrainCorp is scheduled to release its full-year earnings results on 15 November 2012.
Morningstar head of industrials research Peter Rae said given the strategic nature of GrainCorp's assets, it is not entirely surprising that a foreign buyer has shown interest in the company.
"At this stage it is difficult assess what will happen, but given the strategic nature of GrainCorp's almost monopolistic grain-handling, storage and port assets in eastern Australia, we see potential for other parties to show interest," Rae said in a note.
"It is possible a bidding war could emerge for GrainCorp, with other global agribusiness groups such as Asian-based Wilmar a potential suitor.
"Considering the strategic nature of the GrainCorp assets, the Foreign Investment Review Board will also take a look at any foreign bid, but it's unclear whether the deal would be blocked."