GrainCorp stocks hit by ADM retreat

GrainCorp shares have tumbled as much as 10pc after a botched exit from key shareholder Archer Daniels Midland.

The ADM stake is likely to weigh on GrainCorp shares. Pic: Bloomberg

GrainCorp shares have tumbled as much as 10 per cent in morning trade after a botched exit from key shareholder Archer Daniels Midland last night.

The former suitor tried to offload its 19.85 per cent stake in GrainCorp — which was retained after a $3 billion takeover was shunned by the federal government on national interest grounds in 2013 — but failed to find suitable take-up in a process run by a suite of big name brokers last night.

The US giant is believed to want out of the local grains handler as it sees little hope of a shift in the commonwealth’s view on a potential merger now the Nationals have more control of the ruling Coalition.

With traders now fully aware of its intentions the ADM stake is likely to weigh on GrainCorp (GNC) shares until a sale is secured, with the company losing around $170 million in value this morning.

At 11.05am (AEST), GrainCorp shares traded down 6.3 per cent at $8.10 having earlier slumped to a 10-week low of $7.80.

GrainCorp said in a statement it could not comment on ADM’s intentions.

“GrainCorp is aware of media speculation regarding a process being conducted in relation to Archer Daniels Midland’s stake in GrainCorp,” GrainCorp said.

“GrainCorp has no information in relation to this matter and is unable to comment on ADM’s intentions.”

There was hope for a recast ADM bid as recently as the second-half of last year, with GrainCorp shares surging 15 per cent in the fortnight following Malcolm Turnbull’s ascension to the prime ministership.

It was believed Mr Turnbull’s business background would make him more amenable to foreign takeovers, but the blocked sale of the Kidman cattle empire to Chinese interests earlier this year, coupled with a rising influence of the Nationals post the July 2 election, have cast significant doubt on the chances of any offshore GrainCorp offer being cleared in the next few years.