GrainCorp rejects Archer Daniels Midland's revised $2.9 bn bid as too low

Australian grains handler GrainCorp Ltd yesterday rejected a sweetened $2.9 billion bid from US agriculture giant Archer Daniels Midland Co (ADM), saying that the revised offer continues to undervalue the company.

The rejection came after the company posted a record annual net profit last month due to a bumper harvest last season.

''The increase in the proposed price has not changed the board's view that ADM's proposal materially undervalues GrainCorp,'' the Sydney-based company said in a statement. ''GrainCorp's board will be constructive in any dealings in relation to proposals that have the potential to be in the best interests of shareholders.''

Illinois-based ADM, which is seeking to expand outside the US, last month raised its offer by 3.8 per cent from A$11.75 per share to A$12.20 per share, a 40-per cent premium to GrainCorp's share price at the time of the initial offer on 21 October. (See: Archer Daniels Midland sweetens offer for Australia's GrainCorp to $2.9 bn)

ADM, which already held a 9.9-per cent stake in Graincorp, had acquired an additional 10 per cent with the approval of the Australian Foreign Investment Review Board for A$11.75 per share, a few days before tabling its initial offer.

Raising its stake near the 20-per cent threshold level automatically triggers a full takeover bid under Australian securities law.

Analysts have earlier said that the sweetened offer was still below the average acquisition multiple for Australian and global agribusinesses based on forward earnings.