March 29, 2013

ADM gets advantage over GrainCorp

Buoyed by a particularly poor wheat crop hurting GrainCorp's profits, Archer Daniels Midland Co. (ADM) has gained more leverage in its attempt to take over Australian agricultural giant GrainCorp.

In December, ADM, which already owns close to 20% of GrainCorp, bid about US$2.9 billion for the company, which analysts said was an attempt to gain a better position for Asian markets. Now, GrainCorp is projected to experience a 23% drop in profits over the next two years, lowering GrainCorp's share price, and giving ADM less incentive to raise its offer.

ADM's takeover bid is part of a wider trend toward consolidation in the global agriculture industry, the news said. That report said the trend includes Marubeni Corp.'s purchase of Gavilon Holdings, which was described last May, and Glencore's purchase of Viterra, which was described in March.