ADM Lifts Bid for GrainCorp to $2.9B

Archer Daniels Midland (NYSE:ADM) sweetened its bid for Australia’s GrainCorp by 3.4% to $2.9 billion on Monday as it looks to secure an acquisition that would significantly enhance its global footprint.

The Decatur, Ill.-based commodities manufacturer lifted its bid to A$12.20 ($12.73) a share from an earlier A$11.75. Including GrainCorp’s recently announced dividend of 35 cents a share, ADM’s per-share bid is valued at A$12.55.

The maker of vegetable oil, corn sweeteners and flour said the improved offer better values GrainCorp’s business when taking into account its 2012 results as well as new strategic initiatives and dividends.

“Our proposal also offers more certainty, greater value and immediate realization of potential future value for GrainCorp shareholders than GrainCorp’s stand-alone plan,” ADM CEO Patricia Woertz said in a statement.

ADM first offered to buy GrainCorp for A$11.75 on Oct. 19 after acquiring a 15% stake in the company. However, GrainCorp, having reported a 19% increase in full-year profit the same day following a strong harvest, rejected the offer, saying it materially undervalued the company.

While the initial bid represented a premium of 33% to ADM’s share price the day before talks were made public, the sweetened offer represents a premium of 39.6%. Along with the revised bid, which ADM said remains subject to due diligence, the company upped its stake in GrainCorp another 5% to 19.9%.

The takeover would come at a time when the global grains sector continues to consolidate and competition intensifies.