GrainCorp harvests $3.7bn takeover bid
GrainCorp’s board is holding out for details of the unnamed backers behind Long-Term Asset Partners surprise $3.7 billion bid for the east coast grains handling, bulk oils and malting business.
GrainCorp (GNC) revealed this morning that it had received a $10.42-per-share bid which values the grain handler at around $2.4bn but once you factor in long and short term debt of $1.3bn, the offer values the enterprise at close to $3.7bn. The bid is also at a 43 per cent premium to its previous close.
It comes after The Australian’s DataRoom column reported that GrainCorp was making a major announcement on Monday.
LTAP is fronted by experienced infrastructure executives and directors but is declining to say who its financial backers are, beyond bid finance from investment bank Goldman Sachs and $400 million from infrastructure debt investment manager Westbourne Capital.
LTAP is a newly formed entity and should it be successful in securing GrainCorp, it will be its first investment.
LTAP’s bid for GrainCorp came on November 12.
Macquarie Capital and law firm Gilbert + Tobin are on hand to GrainCorp provide advice.
The bid would take Australia’s largest grain handler private, which the suitor believes is a better environment for agribusiness assets that are subject to volatile weather and prices for their returns.
“Under our proposal, GrainCorp shareholders have the opportunity to receive an immediate cash payment at a significant premium and at a price which we believe represents a very attractive value for the company,” Mr Shepherd said.
GrainCorp’s 2017-18 profit plunged by almost half after grain exports were slashed from 7.2 million tonnes to just 2.7 million tonnes by a poor harvest and farmers storing grain themselves in the hope of better prices, rather than sending it into the company’s handling network.
GrainCorp said it was also working on its own plans to realise better value from its assets, including considering divestments and expansion of its three division. The Australia’s DataRoom column has previously reported that Graincorp is in the running to buy Cargill’s malt division.
That portfolio review was advanced enough and the LTAP “not sufficiently certain” that it was not in the company’s interest to halt considering its plans.
In a statement this morning, the company said it had not formed a view on whether the price offered under the LTAP was enough to recommend the bid to shareholders and sought better disclosure.
“Furthermore, the Board requires additional information on the identity of the equity investors underpinning the LTAP proposal as well as the longer term financing plan and intentions for the business, to enable a detailed assessment of the impacts of the LTAP proposal on all of GrainCorp’s stakeholders including our shareholders, grower customers, trading partners and our people,” GrainCorp said in a statement.
At 2.30pm (AEDT), GrainCorp shares had jumped $1.96 or 26.85 per cent to $9.26.
It's the second bid for GrainCorp in the past six years, with Archer Daniels Midland’s $3.4bn offer suffering a rejection at the hands of then Treasurer Joe Hockey after a rearguard action by parts of the National Party and rural Liberals against handing the east coast grains handling giant to a foreign company with questionable dealings in its past.
LTAP believes it would not have to seek Foreign Investment Review Board as it would present as the company, fronted by for Business Council of Australia president Tony Shepherd and the former chief executive of coal rail operator Aurizon — as Australian.
