SYDNEY (Reuters) – Australia’s largest listed bulk grain handler GrainCorp Ltd (GNC.AX) said on Monday it has received a A$2.38 billion (£1.3 billion) takeover proposal from a little-known company called Long-Term Asset Partners Pty (LTAP).
FILE PHOTO: The logo for GrainCorp, Australia’s largest listed bulk grain handler, adorns a sign at the Burren Junction depot located in the New South Wales town of Burren Junction, located north-west of Sydney in Australia, March 15, 2017. REUTERS/David Gray
GrainCorp said LTAP made a cash approach of A$10.42 a share, a near 43 percent premium to GrainCorp’s closing price on Friday.
GrainCorp said it would consider the proposal but needed to know more information about the financial backers of LTAP and its plans for the Australian bulk grain handler.
The company also noted the “complex financing structure” of the deal involving A$3.2 billion in acquisition facilities from Goldman Sachs (GS.N) and A$400 million from Westbourne Capital.
The buyout approach comes as a drought wilts crops across Australia’s east coast, limiting Graincorp’s ability to earn revenue from international grain trading.
“The timing of the offer is opportunistic,” said Belinda Moore, equity analyst, RBS Morgans.
“With the next opportunity for GrainCorp to possibly benefit from materially improved conditions not until 2021, shareholders will likely see this offer as attractive.”
Analysts said the identity of LTAP’s financial backers, however, would be a key determinant in the success of its bid.
LTAP said it was an asset manager for a trust whose beneficiaries were Australian investors.
Australian takeover law means the deal will draw the attention of regulators, and should it transpire that LTAP has foreign backers, it will face additional obstacles.
The Australian government blocked a A$2.8 billion takeover of GrainCorp by U.S. agribusiness giant Archer Daniels Midland Co (ADM.N) in 2013 – bowing to pressure from grain growers.
Aware of the need to win favour with farmers, LTAP said it would not sell any GrainCorp asset.
Reporting by Colin Packham in Sydney; Additional reporting Devika Syamnath in Bengaluru; Editing by Peter Cooney and Stephen Coates