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ACCC Says Will Not Oppose Archer Daniels Midland Acquisition Of Graincorp

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6/26/2013 10:28 PM ET

The Australian Competition and Consumer Commission or ACCC, announced Wednesday that it does not propose to oppose US grain processor Archer Daniels Midland Co.'s (ADM: Quote) proposed acquisition of Australian grain handler and processor GrainCorp Ltd. (GRCLF, GNC.AX).

The ACCC had commenced the public review of the proposed deal on May 3 after Archer Daniels completed the confirmatory due diligence of GrainCorp that was required as per the takeover bid implementation deed signed by the two companies in late-April.

"The ACCC concluded that the proposed acquisition would be unlikely to substantially lessen competition as the merged entity would continue to face competition from a number of sources," ACCC Chairman Rod Sims said.

The review by ACCC involved consultation with grain growers, industry bodies and competitors about the likely effect of the proposed transaction on competition.

Decatur, Illinois-based Archer Daniels and GrainCorp signed a takeover implementation deed on April 25 for ADM to acquire GrainCorp for effective cash payment of $13.20 per share, including $12.20 cash per share and permitted dividends totaling $1.00 per share.

The offer price represents a 49 percent premium over GrainCorp's closing price of A$8.85 on October 18, the day of the last undisturbed share price before ADM first approached GrainCorp.

On Monday, ADM lodged with the Australian Securities and Investments Commission its bidder's statement for an all-cash, off-market takeover offer for GrainCorp. The GrainCorp Board has also unanimously recommended shareholders accept the offer, in the absence of a superior offer.

ADM currently holds a 19.85 percent stake in GrainCorp after it acquired a 10 percent stake in the grain handler at A$11.75 per share in October 2012 and added another 5 percent stake at A$12.20 per share in December 2012.

The company had received approval from the Australian Foreign Investment Review Board to acquire up to 19.9 percent of the shares in GrainCorp.

ADM already has a presence in Australia through its holding of an 80 percent stake in smaller grain handler Toepfer International. The company expects the acquisition of GrainCorp to enable both the companies to be better positioned to connect Australia's farmers with the growing demand for crops and food, particularly in Asia and the Middle East.

GrainCorp, which owns about half of the grain-storage facilities in Eastern Australia, boasts a total grain storage capacity of up to 20 million tons. The company has a market capitalization of A$2.86 billion.

ADM closed Wednesday's regular trading session at $33.58, up $0.41 or 1.24% on a volume of 4.00 million shares.

In Thursday's regular trading session, GNC.AX is currently trading on the ASX at A$12.56, up A$0.02 or 0.16% on a volume of 0.10 million shares.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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