GrainCorp Ltd., Australia's largest listed grain trader and the last standing independent grains handler, has conceded to a $3.4 billion takeover bid offer of U.S.-based Archer Daniels Midland Co (ADM).
The company's shares immediately zoomed up 92 cents, or 7.8 per cent, to A$12.79 when trading started at 11am on Friday, marking an all-time high for Graincorp shares. The stock has traded as low as A$8.38 in the past year.
Confirming the development on its Web site on Friday, ADM said it had also begun due diligence on the Australian company.
"Subject to the satisfactory completion of this due diligence, ADM has agreed to make a cash offer, which would be unanimously recommended by the GrainCorp board, to acquire the company for $A12.20 per share," Patricia Woertz, ADM chairman and chief executive, said.
"Under the terms of the bid implementation deed, GrainCorp will pay to its shareholders dividends out of current and retained earnings of the business prior to the transaction close."
ADM has a seven-day period to undertake due diligence on GrainCorp.
This is ADM's third attempt to court Australia's biggest grain handler to yield to a takeover. It first approached GraincCorp in October 2012 with a $2.6 billion bid, or $11.75-per-share, which GrainCorp rejected. A second approach, at $12.20-per-share, worth $2.8 billion, lodged in December was also rebuffed.
"You saw the share price slipping away a week or two ago on the risk that a higher offer wouldn't come through. I don't think this offer will disappoint," Jordan Rodgers, an equities analyst at Commonwealth Bank of Australia, told Reuters.
"The GrainCorp Board believes that the ADM offer highlights the strategic value of our business and unique assets, the program of strategic initiatives being undertaken and GrainCorp's enviable proximity to the fast growing Asian markets," GrainCorp Chairman Don Taylor said in a statement on Friday.