GrainCorp chief executive, Mark Palmquist, didn't learn about a disastrous late night manoeuvre by his biggest shareholder, Archer Daniels Midland, until Wednesday morning, when he got off a long-haul flight from Europe.
Arriving in Melbourne for a panel discussion at the annual Australian Grains Industry Conference, Mr Palmquist digested news ADM had attempted and then aborted a sale of its 19.9 per cent holding in GrainCorp.
On Tuesday evening Chicago-based ADM had asked adviser Lazard to sell the stake via a Dutch auction that went horribly wrong.
After failing to get an appropriate deal (it is suggested the banks contacted only wanted to pay about $8 a share, well below GrainCorp's $8.64 closing price on Tuesday, and no one wanted the whole stake) ADM pulled the sale.
On Wednesday more than $110 million was wiped from GrainCorp's market capitalisation as investors pondered confirmation that ADM had quit its four-year pursuit of the Australian company, and the impact of a massive overhang of stock in the market.
GrainCorp shares fell as much as 8 per cent before closing down 49 cents at $8.15.
Big West Australian grain co-operative CBH, which was yesterday speculated as a potential buyer of some of ADM’s GrainCorp shares, has been quick to reject the theory.
Group chief executive Andrew Crane, said the grains handler was not approached about buying a stake in GrainCorp.
"No. We have no interest in acquisitions in GrainCorp. That's not our focus," Mr Crane said.
Mr Palmquist said he had not missed any warning signs, phone calls or emails about a potential share sale from anyone at ADM during his Tuesday flight back to Australia.
It is understood, however, GrainCorp management attempted to talk to ADM on Wednesday.
I have not had a conversation with ADM and I do not want to speculate on what they are doing or why they might be repositioning," Mr Palmquist told the AGIC conference.
In a later statement he said GrainCorp's performance was "underpinned by growing demand for our products and strategic assets around the world".
"These strong fundamentals have not changed and are not affected by the speculation," he said.
"We remain firmly focused on delivering our strategic projects to grow underlying earnings.
“Regardless of ADM's intentions for their holding, they are an important customer for GrainCorp and we will continue to work closely with them."
ADM, which paid an initial $11.75 per share in 2012, said in a statement “ we regularly review our business portfolio and consider the wider range of strategic opportunities to determine how best to maximise shareholder returns”.
“There can be no assurance these discussions will result in a transaction."
The ADM debacle has emboldened the nation's biggest grains handler, CBH, which became the target of a GrainCorp-backed sharemarket-listing proposal this year.
GrainCorp is a financial backer for the Australian Grains Champion proposal to pay West Australian growers $1 billion and list their co-operative on the Australian Securities Exchange.
Industry experts estimate CBH would have a market value of about $3 billion compared to GrainCorp's $1.9 billion.
GrainCorp could emerge with a 20 per cent stake in a newly listed CBH without paying any premium for the privilege.
"Our growers were clear that they don't want GrainCorp running the supply chain through AGC," Mr Crane said.
- This story first appeared on The Australian Financial Review.
