December 14, 2012, 10:58 AM ADM Could Pay Up to $3 Billion For GrainCorp: J.P.Morgan Article Comments Deal Journal Australia HOME PAGE »
By Gillian Tan
J.P.Morgan analyst Stuart Jackson reckons Archer Daniels Midland Co. could lift its already sweetened offer for GrainCorp Ltd. to as much as A$13.05 a share, or 3 billion Australian dollars (US$3.1 billion).
ADM’s current A$12.20 a share offer, which valued GrainCorp at A$2.8 billion, has been rejected on the basis that it materially undervalued the company.
Associated Press Mr. Jackson believes a final price at or above A$12.65 a share, excluding a declared 35 cent dividend, is needed to gain board support. Such a proposal represents a 3.7% lift on the rejected offer.
“We believe ADM could increase its offer to between A$12.65 and A$13.05 a share, ex-dividend, without materially impacting the attractiveness of the deal, ADM’s funding capability or its credit position beyond the expected one notch downgrade from the original offer,” the broker told clients.
Mr. Jackson believes GrainCorp is open to renegotiating an outcome, and has an Overweight recommendation on the stock and a price target of A$13.00 a share. The grain handler last traded at A$12.30 a share.
Macquarie analyst Rikki Bannan told clients that an offer increase from ADM remains “a chance”, but it is largely factored into the stock’s 40.7% rise from pre-bid levels. The broker has an Underperform rating and a price target of A$12.50 a share.
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