SPECULATION of a Russian counter-bid for GrainCorp failed to ignite the company’s share price on Wednesday, though suitor Archer Daniels Midland confirmed it was ”committed” to its $2.7 billion offer.
News agency Bloomberg reported on Tuesday that Russia’s biggest port operator, Summa Group, was raising money for a foreign grain takeover and was considering an offer for GrainCorp before ADM confirmed its $11.75-a-share takeover offer last week, after boosting its stake to 14.9 per cent.
Moscow-based Summa chairman Ziyavudin Magomedov said in September: ”We are looking outside because Russia doesn’t have a global player in soft commodities markets. We have Glencore, Dreyfus, Cargill here, and Russia, which possesses such a powerful resource, doesn’t have its own worthy global player.”
RBS Morgans analyst Belinda Moore, who expects a higher offer for GrainCorp will be needed to win a board recommendation, said reports that Summa was considering a tilt ”just show that potentially there could be others interested … you’d expect that everyone’s got to look at it”.
Commodities trader Bunge had also recently commented that it would be part of continuing industry consolidation, although it stressed it would be disciplined about acquisitions.
GrainCorp shares rose 6¢ or 0.5 per cent to $12.27 on Wednesday, mildly underperforming the broader sharemarket.
Overnight on Monday, ADM reported a 60 per cent fall in its quarterly profit – due partly to the US drought – and flagged it could need to suspend a share buyback to fund the acquisition.
Net profit for the September quarter fell to $US182 million ($176 million), from $US460 million a year earlier. Sales were flat, falling 0.4 per cent to $US21.8 billion.
ADM chief executive Patricia Woertz said first-quarter results were mixed.
Asked why ADM bought 10 per cent of GrainCorp before launching the takeover, Ms Woertz said it was ”quite common in Australia to do a pre-bid stake, and I think it shows our commitment to wanting to do a deal with them.
”They’re evaluating our bid as they have said, and we’ll leave it there.
”The investment itself is, of course, in line with our strategy … and it will meet our financial hurdles as we continue to be disciplined as we look at these kinds of opportunities.”
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