GrainCorp bidder in holding pattern

LTAP bid in holding pattern as it studies GrainCorp books

Farm Online News

GrainCorp awaits more information about Long-Term Asset Partners' complex financial credentials


GrainCorp continues to await more information about the complex financial credentials behind the debt-funded takeover bid launched in November by newly-formed Long-Term Asset Partners.

LTAP’s initial banking underwriter, Goldman Sachs, and other financial and legal specialists, have been given access to GrainCorp’s data room to trawl through the big grain logistics, marketing and processing company’s own figures before compiling a binding offer.

LTAP’s initial offer valued GrainCorp at $2.4b, plus a further $900 million to cover debt associated with the acquisition.

Although the forensic due diligence study of GrainCorp’s books continued through the Christmas-New Year break, both companies said there was still no indication when there would be anything to report to shareholders.

The due diligence process may take another month.

GrainCorp chairman, Graham Bradley, has already noted his board regarded the $10.42 a share proposal as undervaluing the diverse business.

Meanwhile, GrainCorp has continued working on its own portfolio review which centres on potential options to maximise the value of its global malting and bulk liquid storage terminal businesses.

Speculation continues

Speculation has Australia’s biggest listed agribusiness looking to establish a partnership to boost investment in either or both divisions, or possibly off-loading some assets.

The true colour of LTAP’s own capital investment backing and its plans for GrainCorp have also been the focus of wide speculation, including suggestions about rail and related freight investment ambitions which could boost the efficiency of transport links between grainbelt receival sites and export terminals.

LTAP has remained tight-lipped, including about speculation that its bold takeover moves rely on long term crop insurance guarantees with European reinsurance giant, Allianz.

Ironically, GrainCorp’s east coast storage and handling business is dealing with its smallest and least profitable winter harvest challenge more than a decade.

Much of its activity now centred on handling grain imported from West Australian rival CBH to supply the drought feed market.

Just 2 million tonnes of grain have been received in its NSW, Victorian and Queensland silos – down from about 12m tonnes two seasons ago.

In contrast, CBH has enjoyed a bumper harvest, handling almost 16.5m tonnes and reaping solid domestic market prices because of the east coast drought, while some of its offshore markets have also been more attractive of late because GrainCorp has not been a competitor.

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