GrainCorp receives US$2.4b buyout offer from Long-Term Asset Partners

AUSTRALIA – GrainCorp, Australia’s leading grain and commodities trading company has received a US$2.4 billion buyout offer from Long-Term Asset Partners Pty Ltd (LTAP).

The indicative offer involves control of 100% of the shares in GrainCorp for cash

consideration of US$10.42 per share.

According to GrainCorp Board, the proposal is subject to a number of conditions and involves a complex financing structure with significant leverage comprising US$3.2 billion in acquisition facilities from Goldman Sachs and US$400 million from Westbourne Capital.

The board looks to engage with LTAP regarding their proposal including the value offered compared to other value creation alternatives and strategies available to GrainCorp.

“There is no certainty that the proposal will result in a binding proposal for GrainCorp, what the terms of any such proposal would be, or whether it will be recommended by the GrainCorp Board,” the cooperative said.

“In particular, the LTAP proposal and the acquisition financing facilities are conditional on due diligence, which will be provided once appropriate confidentiality and standstill arrangements have been put in place including customary protections for GrainCorp.”

Portfolio review

In its recently released 2018 financial results, the company indicated that it was prioritizing an evaluation of capital management and portfolio optimisation opportunities.

This involves assessment of GrainCorp’s business portfolio to develop and implement strategies to unlock and create improved value for shareholders.

The evaluation also includes value maximising options for the bulk liquid storage infrastructure assets in its portfolio and options for maximising the value of its global Malt portfolio.

It highlighted that it was considering initiatives to enhance the global grain infrastructure and capabilities in the GrainCorp portfolio.

The company reported a 50% decrease in annual profits to US$51.37 million as a result of poor grains in eastern Australia.

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