Higher offer for GrainCorp unlikely, says Grant Samuel
GrainCorp shares could be worth more than the $13.20 a share offer on the table due to the scarcity value of the grain handler's assets, shareholders were told on Monday.
US agribusiness ADM has made the offer for GrainCorp, which independent expert Grant Samuel estimates to be worth as much as $13.97 a share.
ADM is to pay $12.20 in cash with the balance paid in dividends.
GrainCorp shares closed up 3¢ at $12.50 on Monday in a weaker sharemarket.
Despite recommending shareholders accept the ADM takeover, Grant Samuel said a higher offer could emerge for the company
"It is conceivable that a third party could make a higher offer for GrainCorp: GrainCorp has a number of important strategic attractions for international grain companies, including its unreplicable asset base and ownership of seven out of the eight major grain export terminals in eastern Australia; there is no structural or absolute impediment to an alternative acquirer," the adviser said. "While there is a 'no-shop' agreement, GrainCorp can respond to unsolicited proposals from other parties."
ADM holds a 19.85 per cent shareholding in GrainCorp which could deter other suitors, although "it would not stop a determined bidder" launching a counter offer.
"Potential bidders may have been waiting: to see ADM Australia's full offer price; and/or to see the baseline price at which GrainCorp directors would recommend an offer; and there remains plenty of time for an alternative bidder to come forward," Grant Samuel said.
Even so, it said the prospect of a rival bidder emerging was unlikely, as ADM had announced its intention to bid several months ago and there has been no response from other possible bidders.
GrainCorp handles around three-quarters of the east coast's grain harvest, as well as owning the export terminals, providing any acquirer with an "end-to-end" network, the Grant Samuel report said.
Directors have recommended shareholders accept the ADM offer in the absence of a higher bid.