ADM to acquire GrainCorp
Posted: 1 May 2013 | Archer Daniels Midland Company | No comments yet
Archer Daniels Midland Company has completed due diligence on GrainCorp Limited and intends to make a cash offer to acquire the outstanding common shares of the company…
Archer Daniels Midland Company (NYSE: ADM) announced today that it has completed due diligence on GrainCorp Limited (ASX: GNC) and intends to make a cash offer to acquire the outstanding common shares of the company for A$12.20 per share under the terms of the takeover bid implementation deed signed with GrainCorp last week.
“We believe the offer delivers strong value for both companies’ shareholders,” said ADM Chairman and CEO Patricia Woertz. “The acquisition fits well with our growth strategy and will meet our return objectives. We are also confident in the cultural fit of our two companies: we share similar values of integrity, excellence and safety, with strong commitments to people, communities, customers and sustainability.
“With the world’s population growing by half a billion people every decade, and with rising incomes driving increased consumption of grains and protein, global demand for agricultural products will continue to see significant growth. GrainCorp provides an excellent platform to serve that growth, particularly in fast-growing markets in the Middle East, Africa and Asia. Together, ADM and GrainCorp will give customers around the world access to a more diversified origination portfolio while providing Australian growers with greater access to world markets, enhanced logistics, and leading market insight.”
The offer implies an aggregate transaction value of about A$3.4 billion. The transaction value reflects the weighted average cost of acquiring the initial 19.8 percent stake in GrainCorp at an average of A$11.24 per share, and the remaining shares of GrainCorp at A$12.20 per share. The transaction meets ADM’s key financial objectives, and will be earnings accretive in the first full year. ADM will fund the acquisition through a combination of operating cash flows and debt.
As part of the agreement, GrainCorp will additionally pay to its shareholders, prior to the completion of the transaction, dividends totaling A$1.00 per share. If the regulatory conditions are not achieved by Oct. 1, 2013, GrainCorp will pay an additional dividend of A3.5 cents per share for each full month between Oct. 1, 2013 and the satisfaction or waiver of the regulatory conditions, subject to GrainCorp being profitable over that period.
GrainCorp has indicated that the ADM offer would be unanimously recommended by the GrainCorp board, subject to there being no superior proposal, an independent expert confirming that the offer is fair and reasonable, and the regulatory conditions for the acquisition being satisfied or waived by Dec. 31, 2013.
The offer is subject to conditions, set out in the takeover bid implementation deed viewable at www.adm.com, which include ADM receiving a minimum acceptance of 50.1 percent of GrainCorp shares. ADM presently owns 19.8 percent of GrainCorp’s shares.
The company will discuss the GrainCorp transaction during today’s first quarter financial results conference call and audio webcast at 5 p.m. Central U.S. Time (8 a.m. Australian Eastern Standard Time). To listen to the call via the Internet or to download the slide presentation, go to www.adm.com/webcast. To listen by telephone, dial (888) 522-5398 in the U.S. or (706) 902-2121 if calling from outside the U.S. The access code is 32838804.
ADM will file a Bidder’s Statement, and GrainCorp will file a Target’s Statement with the Australian Securities Exchange (the “ASX”)
Barclays and Citi are acting as financial advisors. Corrs Chambers Westgarth and Cravath, Swaine & Moore LLP are acting as legal advisors.