GrainCorp agrees to US takeover

Australia's last listed major grains marketer, GrainCorp, is set for foreign takeover, following the likes of AWB and ABB Grain.

GrainCorp has reached conditional agreement to sell to US-based global foods business Archer Daniels Midland Company (ADM) all the shares that ADM does not already own in GrainCorp at $13.20 per share.

At $13.20 per share, GrainCorp is valued at $3.02 billion.

GrainCorp chairman Don Taylor said the agreement marked a very significant day in GrainCorp's history.

"We believe that this puts GrainCorp shareholders in an excellent position," Mr Taylor said.

"It highlights several things to me: firstly, the strategic value of GrainCorp as a business, and our assets...and also the substantial opportunity for Australian agriculture as the world's population increases over the coming decades."

Mr Taylor said the $13.20 offer price represented a 49 per cent premium to GrainCorp's closing share price just prior to ADM's first proposal.

At 1539 AEST, GrainCorp shares were 95 cents, or 8.0 per cent, higher at $12.82.

ADM has said GrainCorp fits into its strategy of growing ADM's agricultural services and oilseeds businesses by investing in key supply regions outside the United States.

As part of ADM, GrainCorp would be better positioned to supply markets in Asia and the Middle East.

"ADM is a big company, and offers potential access to the global network that complement our own," Mr Taylor said.

ADM already holds a 19.8 per cent stake in GrainCorp, and has had two takeover proposals rejected by GrainCorp since making its first indicative proposal, at $11.75 per share, in October 2012.

A revised proposal of $12.20 per share in December 2012 was rejected as undervaluing the company.

The $13.20 proposal comprises a cash payment of $12.20 per share plus dividends totalling $1.00 per share.

The dividends are expected to be fully franked, which will provide an extra 43 cents per share for many shareholders.

The deal is conditional upon there being no superior offer for GrainCorp, an independent expert determining that the ADM offer is fair and reasonable, and regulatory approval in Australia and China.

GrainCorp exports some barley and malt to China, and ADM has joint-venture oilseed and soybean processing plants, and other operations, in China.

Part of the deal is that if regulatory approval is not achieved by October 1, 2013 GrainCorp shareholders will receive an extra fully franked dividend of 3.5 cents per share for each full month between October 2013 and the date that regulatory conditions are satisfied or waived.

GrainCorp chief executive Alison Watkins said regulatory approval was expected to progress efficiently but there was potential for delays beyond GrainCorp's control.

Mr Taylor said the Chinese regulator, the Ministry of Commerce of the Government of the People's Republic of China, had been known to take longer than was expected in the marketplace to make its deliberations.

RBS Morgans analyst Belinda Moore said the deal was a very attractive outcome for GrainCorp shareholders.

"Not only is it an attractive price, but shareholders are also getting paid for hanging around until regulatory approval is received," she said.

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