US GRAIN conglomerate Archer Daniels Midland has increased its stake in GrainCorp from 15.9 per cent to 19.9 per cent.It puts more pressure on the bulk handler to sell.
ADM notified the Australian Securities Exchange today it now had an aggregate economic interest in 45,420,054 shares in GrainCorp.
The US company paid $12.20 a share for most of the extra 5 per cent stake it bought yesterday - well above its initial bid price of $11.75 a share.
It is proposing to buy all outstanding shares at $12.20 a share with existing shareholders able to retain the recently announced 35-cent dividend.
The revised bid values GrainCorp at $2.8 billion.
Three weeks ago, the GrainCorp board rejected a conditional proposal by ADM to take over the bulk handler at $11.75 a share, saying it "materially undervalued'' the company.
ADM said yesterday the Foreign Investment Review Board had given approval to increase its shareholding in GrainCorp to 19.9 per cent.
Under Australian laws, ADM would require further FIRB approval to make a full bid for GrainCorp – a sensitive issue in Federal political circles.
"Our proposal also offers more certainty, greater value and immediate realization of potential future value for GrainCorp shareholders than GrainCorp's stand-alone plan,'' said ADM chief executive officer Patricia Woertz.
"ADM is a disciplined buyer, and any combination with GrainCorp must meet our key financial hurdles, taking into consideration the impact of the Australian agricultural cycle on GrainCorp's earnings power.''
GrainCorp said its board would review the revised proposal and advise the market in due course.