GrainCorp’s share price has rallied again after crashing in the wake of an unsuccessful exit attempt by major shareholder and former takeover aspirant, Archer Daniels Midland (ADM).
US-based ADM is understood to have been hoping to off-load its 19.9pc stake in GrainCorp, worth about $400 million, for about $8.50 a share in a swift overnight package deal last week.
The investment banks approached were, however, apparently unwilling to pay much more than about $8 for a serious stake in the big bulk handler, trader and grain processor.
When news emerged of ADM’s sell-off intentions after almost four years on GrainCorp’s share register, the price sank to $8.10, but rebounded to almost $8.50 by week’s end, before drifting to about $8.38 a share this week.
Although taken by surprise by ADM’s move last Tuesday night, GrainCorp management has since confirmed it has talked with ADM about the attempt to quit its interest, but no specific details, or timelines for future moves were covered.
“We have connected with ADM, but the terms of their shareholding decisions have not been made known to GrainCorp,” said government and media relations director, Angus Trigg.
Given the listed status of both companies in the US and Australia, observers have not expected any specific price sensitive details of ADM’s plans to be discussed unless those details were also intended to be revealed to the share market.
With ADM still believed to be keen to sell out and GrainCorp’s share register set for an injection of new blood, analysts say there is some chance a new major strategic investor may enter the fold.
Industry speculation has even suggested GrainCorp would be free to use the opportunity to attract a key joint venture partner, or two, to share some of its under-utilised port operations.
In the wake of good recent rain across the eastern Australian grainbelt and continuing optimistic fundamentals for the company’s grain products, Credit Suisse has also upgraded GrainCorp’s stock to "outperform".
ADM first paid a premium of $11.75/share in late 2012, launching an unsolicited overnight takeover attempt.
A year later, after lifting its offer above $12/share, ADM’s $3.4 billion bid for the former grower-owned company was blocked by the federal government after Treasurer Joe Hockey’s consultations with the Foreign Investment Review Board and strong farm sector opposition to the bid.
