Farm products company Archer Daniels Midland Co. (ADM) Thursday signed a takeover bid implementation deed with Australian agribusiness company GrainCorp Ltd. (GRCLF.PK). As a result, the company said it has begun due diligence on GrainCorp.
Subject to the satisfactory completion of the due diligence, Archer Daniels has agreed to make a cash offer, which would be unanimously recommended by the GrainCorp board, to acquire the company for A$12.20 per share. The potential offer would imply an aggregate transaction value of A$3.4 billion, including GrainCorp's net debt.
The deal 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 outstanding shares of GrainCorp at A$12.20 per share.
The deal is expected to be cash accretive in the first full year and to meet Archer Daniels's key financial objectives.
"Should the offer proceed, the addition of GrainCorp to our global network would fit our strategy and help to further connect Australia's growers with growing global demand for crops and food, particularly in Asia and the Middle East," said Patricia Woertz, Chief Executive of Archer Daniels.
The agreement permits Archer Daniels to undertake due diligence on GrainCorp for a seven-day period. Subject to the satisfactory completion of the due diligence, Archer Daniels will announce whether the potential offer will proceed or the deal will be terminated.
Archer Daniels said it will make an announcement on the feasibility of the deal prior to the completion of Archer Daniels's first-quarter earnings call, which has been rescheduled to begin May 1.
Should the potential offer proceed, Archer Daniels would announce a takeover bid to GrainCorp shareholders.
GrainCorp has advised that such an offer would be unanimously recommended by its 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 December 2013.
If the potential offer proceeds, GrainCorp would 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 October 1, 2013, GrainCorp will pay an additional dividend of A3.5 cents per share for each full month between October 1 and the satisfaction or waiver of the regulatory conditions, subject to GrainCorp being profitable over that period.
Following successful completion of the due diligence process, Archer Daniels would provide additional details.
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