GrainCorp CEO Alison Watkins: GrainCorp said it had not received a formal proposal from ADM but would engage in discussions.AGRIBUSINESS giant Archer Daniels Midland (ADM), the world’s largest corn processor, has confirmed a friendly cash bid for GrainCorp as it lifts its exposure outside the US.
ADM already owns 14.9 per cent of GrainCorp after buying 10 per cent of the company on Thursday night for $11.75 a share – a 33 per cent premium to the previous close of $8.85 – valuing the company at $2.7 billion. If ADM wishes to increase its stake above 15 per cent, it will need approval from the Foreign Investment Review Board.
However, Queensland Premier Campbell Newman said last night he was worried an overseas company could have an ”almost unfettered monopoly” over grains handling on the Australian east coast.
Mr Newman, who worked in senior roles at GrainCo until 2001 before GrainCorp took over that company in 2003, said he had complained to the competition regulator in 2002 about the planned takeover of GrainCo, citing fears about the east coast grain-handling monopoly the merger was to create.
”I guess my concern now is that an international company will have such a monopoly,” he said.
”It means that you’ll have an offshore company, an American company, having incredibly strong market power in terms of the storage and handling of grain.”
ADM confirmed it had ”approached GrainCorp with the aim of arriving at an agreement under which GrainCorp’s board would recommend a cash acquisition”. Any agreement would be subject to satisfactory due diligence, regulatory approvals and other conditions, ADM said.
ADM’s chairman and chief executive, Patricia Woertz, said the investment in GrainCorp was ”part of our ongoing portfolio management and is consistent with our strategy of growing our agricultural services and oilseeds businesses by investing in key supply regions outside the United States”.
GrainCorp said it had not received a formal proposal from ADM but would engage in discussions and requested a trading halt in its shares on Friday, which is due to be lifted tomorrow.
A report at the weekend that the chairman, Don Taylor, had called on ADM to raise its bid to at least $14 a share was rejected as inaccurate by a GrainCorp spokesman yesterday.
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