ADM and GrainCorp Sign A$3bn Takeover Bid Implementation Deed
26 Apr 2013 --- GrainCorp has recommended shareholders accept a takeover offer by suitor Archer Daniels Midland (ADM) which sweetened the deal by adding a special dividend. GrainCorp knocked back a Aus$2.68 billion, Aus$11.75-per-share offer in October from ADM and again advised against an improved Aus$12.20-per-share bid in December.
It has now been announced that ADM has signed a takeover bid implementation deed with GrainCorp Limited and begun due diligence on GrainCorp. Subject to the satisfactory completion of this due diligence, ADM 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. Under the terms of the bid implementation deed, GrainCorp will pay to its shareholders dividends out of current and retained earnings of the business prior to the transaction close.
“We are pleased to have reached agreement with GrainCorp to conduct due diligence and, subject to that due diligence, put a recommended offer before GrainCorp’s shareholders,” said ADM Chairman and CEO Patricia Woertz. “We anticipate that the offer will be cash accretive in the first full year and will meet our key financial objectives.
“GrainCorp is a leader in the Australian agribusiness sector. 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. ADM and GrainCorp have complementary geographies with little overlap and highly compatible cultures. We look forward to working with the GrainCorp team and Australian growers to build on their history of success.”
The agreement permits ADM to undertake due diligence on GrainCorp for a seven-day period. Subject to the satisfactory completion of this due diligence, ADM will announce whether the potential offer will proceed or the agreement will be terminated. The announcement will occur prior to the completion of ADM’s first-quarter earnings call, which has been rescheduled to begin May 1, 2013, at 5 p.m. Central U.S. Time (May 2, 2013, at 8 a.m. Australian Eastern Standard Time).
Should the potential offer proceed, ADM would announce a takeover bid to GrainCorp shareholders. GrainCorp has advised that such an offer would be unanimously recommended by the GrainCorp 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 Dec. 31, 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 Oct. 1, 2013, GrainCorp will pay an additional dividend of A3.5 cents per share for each full month between Oct. 1, 2013, and the satisfaction or waiver of the regulatory conditions, subject to GrainCorp being profitable over that period.
The potential offer would imply an aggregate transaction value of A$3.4 billion, including GrainCorp’s net debt. The transaction 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 transaction is expected to be cash accretive in the first full year and to meet ADM’s key financial objectives. Following successful completion of the due diligence process, ADM would provide additional details.
The offer would be subject to the conditions set out in the takeover bid implementation deed, which include that ADM receives minimum acceptances of 50.1 percent. ADM presently owns 19.8 percent of GrainCorp’s shares.
Barclays and Citi are acting as financial advisors. Corrs Chambers Westgarth and Cravath, Swaine & Moore LLP are acting as legal advisors.
