USA & Australia: ADM sells its 19.9% stake in GrainCorp

U.S. agricultural commodities trader Archer Daniels Midland (ADM) has sold its 19.9 per cent stake in GrainCorp to underwriters UBS, just three years after a failed bid to wholly acquire the Australian grain handler, ADM said on December 1.

The sale to the Swiss bank was valued at A$387 million (C$382 million), or A$8.53 (C$8.42) a share, ADM said.

ADM’s A$2.8 billion bid to buy Australia’s largest listed grain handler was blocked by government regulators in 2013 near the peak of a grain market boom.

Commodities prices have since tumbled and ADM and rival agribusinesses are focusing increasingly on higher-margin businesses such as natural food ingredients and specialty commodities to boost slumping returns.

“This transaction will allow us to further reduce our invested capital, and it will provide cash that we can redeploy to higher-return investments,” ADM CEO Juan Luciano said in a statement.

ADM had been shopping its GrainCorp stake this year, but was unable to find a buyer for the entire stake and canceled the sale process in July 2016, sources said.

GrainCorp’s Canadian grain handling and processing assets include Calgary-based malt processor Canada Malting, which GrainCorp acquired in 2009 when it took over United Malt Holdings.

GrainCorp late last year also announced a joint venture, GrainsConnect Canada, with Japan’s Zen-Noh Grain, to build a grain elevator network in Alberta and Saskatchewan.

ADM shares were up about 2.5 per cent on December 1 at US$44.31, up nearly 21 per cent since the beginning of 2016. GrainCorp shares drifted lower to A$8.71 in early trading on the Australian Stock Exchange on December 2, up less than one per cent on the year.

02 December, 2016