GrainCorp stock falls 25pc after Hockey blocks ADM deal

INVESTORS wiped $560m from the value of GrainCorp in the hours after Joe Hockey blocked its takeover by a US rival.

INVESTORS wiped $560 million from the value of GrainCorp in the hours after Joe Hockey blocked its takeover by a US rival.

Trading in GrainCorp stock was delayed this morning to allow the market to digest Mr Hockey's decision, revealed at 8am AEDT, and the GrainCorp response issued at 10.45am AEDT. On opening shortly before midday the shares slumped more than 25 per cent or $2.89 each to $8.31, and by the afternoon were down 22 per cent at $8.73 each, valuing Australia's biggest grain processor at about $2 billion.

GrainCorp chairman Don Taylor said he was "extremely disappointed'' with the Mr Hockey's decision to block a takeover by US giant Archer Daniels Midland.

"Today's events will have enduring implication that will be felt not only by our shareholders but by the entire industry,'' Mr Taylor said.

"Australian agriculture has been prevented from realising the potential benefits from the significant capital ADM would have invested in the long term future of the industry.''

But he said the board remained confident in its ability to continue to implement its long-term strategy, which has seen the it move into the malt and oil seed processing business to reduce its reliance on volatile grain harvests.

"Graincorp has remained focused throughout the proposed takeover on the profitable operation of GrainCorp's business and strategic assets,'' Mr Taylor said.

Hockey rejects US bid for GrainCorp

The stock has been largely in the hands of hedge funds since ADM began building its stake and working to get a recommendation from the GrainCorp bid.

The bid of $13.20 - including $1 of dividends - is a 49 per cent premium to the price before the bid was launched in October last year.

However the shares fell sharply to a low of $11.13 two weeks ago amid reports - later rejected - that Prime Minister Tony Abbot was inclined to veto the deal. The Foreign Acquisitions and Takeovers Act makes the decision the sole responsibility of the Treasurer.

Nationals: Growers will be pleased

Analysts said that without the bid the shares should be valued around $8.50. Graincorp reported a 31 per cent fall in annual profit on a lower east coast grains harvest and forecast a lower harvest again for this year.

It was not clear from ADM's statement this morning whether it intended to take Mr Hockey's offer of increasing its stake from 19.9 per cent to 24.9 per cent.

ADM executive chairman Patricia Woertz said in a statement that the company is considering its options, including capital distributions to shareholders.

"As owners of 19.85 per cent of the GrainCorp, we will look to work with them to maximise returns on our investment and create value for both companies.

CBH eyes east coast grain assets

GrainCorp chief executive Alison Watkins told The Australian this week that the opposition to the bid risked damaging GrainCorp and the grains industry because it would deny the industry promised investment in rail and grains handling infrastructure.

ADM made a last ditch offer on Wednesday to spend $250m on top of GrainCorp's existing $250 million commitments, on upgrading grains infrastructure, as well as agreeing to price caps on grain handling charges.