ADM lifts GrainCorp stake, seeks agreed takeover
Archer Daniels Midland opened a fresh chapter in the consolidation wave in agricultural trading by unveiling plans to buy GrainCorp, the Australian grain handler, on which it spent $280m raising its stake.
Archer Daniels Midland said it had approached the GrainCorp board hoping to negotiate an agreed takeover of the Sydney-based group, in which it had raised its holding from 4.9% to 14.9%.
As part of the Archer Daniels Midland empire, GrainCorp “would be better positioned to connect Australia’s farmers with growing global demand for crops and food, particularly in Asia and the Middle East”, Patricia Woertz, the ADM chief executive, said.
A deal would also promote a drive by ADM to boost its agricultural services and oilseeds operations by investing in “key supply regions” outside its native US, an expansion campaign which earlier this year took it into the auction for Canadian grain handler Viterra.
While ADM pulled out of the auction for Viterra on valuation grounds, leaving Glencore to win the deal, Ms Woertz said that a GrainCorp acquisition “would meet ADM’s key financial hurdles”.
GrainCorp said that any proposal from ADM would be reviewed “as well as other options to maximise value for GrainCorp shareholders”.
ADM’s move revives a merger wave in the sector which has this year seen Marubeni purchase US-based Gavilon for $5.3bn, besides Viterra’s $6.1bn acquisition by Glencore.