Australian agribusiness GrainCorp on Thursday rejected an Aus$2.68 billion (US$2.78 billion) all-cash takeover offer from US food giant Archer Daniels Midland (ADM), holding out for more money.
Leading agricultural commodities trader ADM made its indicative and non-binding bid last month, saying it was prepared to pay Aus$11.75 for each GrainCorp share.
GrainCorp’s stock was trading 0.25 percent higher at Aus$12.21 early Thursday after it reported a record net profit for fiscal 2012, up 19 percent to Aus$204.9 million in the year to September 30.
Given the strength of its earnings the board of the Australian company said it had decided that the ADM offer was not enough.
“The GrainCorp board has determined that the proposal materially undervalues GrainCorp and has advised ADM accordingly,” the company said.
“The GrainCorp board remains committed to maximising value for shareholders.”
GrainCorp services about 30,000 grain producers in the eastern states of Queensland, New South Wales, Victoria as well as South Australia and has one of the largest grain storage, handling and logistics networks in the nation.
Its combined storage capacity is more than 21 million tonnes at about 280 sites nationwide, with its vast network aligned with rail and road links for transporting grain to market.
Analysts say ADM is interested in the company to gain a foothold in Asia.
Illinois-headquartered ADM is one of the world’s biggest food companies, producing goods from cottonseed and peanuts to ethanol and animal feed.
It is also a large manufacturer of biodiesel and ethanol.
Australia's GrainCorp rejects US takeover bid
