CHICAGO — Archer Daniels Midland Co. on Dec. 1 said it has entered into an agreement to sell its 19.9% ownership stake in GrainCorp Ltd. for A$8.53 per share, or approximately A$387 million ($287.1 million). The news led to a small spike in ADM’s share price, which climbed as high as $44.74 in early trading on the New York Stock Exchange on Dec. 2, up from its open of $43.15 on Dec. 1. Australia-based GrainCorp’s share price also advanced, increasing as high as A$8.97 on Dec. 2 after opening at A$8.75 on Dec. 1.
|Juan Luciano, chairman and c.e.o. of ADM|
“As part of our ongoing portfolio management, we carefully considered our equity investment position in GrainCorp and determined that we could better meet our long-term returns objectives by reallocating that capital,” said Juan Luciano, chairman and chief executive officer of ADM. “This transaction will allow us to further reduce our invested capital, and it will provide cash that we can redeploy to higher-return investments as we continue to execute our balanced capital-allocation framework.”
ADM said the transaction has been executed by way of an underwritten sale to an underwriter. Under the terms of the agreement, ADM will sell all of its 19.9% investment in the issued capital in GrainCorp at a price of A$8.53 per share.
ADM attempted to sell its 19.9% stake in GrainCorp on July 26 in a “Dutch auction” run by advisory firm Lazard. The asking price was about A$8, but offers came in too low at A$7 per share, Australian media reported.
ADM bought its stake in GrainCorp in 2012 before making a $3 billion takeover bid for the company in 2013. Although the deal received several regulatory approvals, Australian Federal Treasurer Joe Hockey prohibited the acquisition.