Global grain and food processing giant Archer Daniels Midland (ADM) is scouting for buyers to take its contentious 19.9 per cent stake in eastern Australia’s grain giant GrainCorp.
On Tuesday night ADM launched a sale offer, but apparently withdrew from the market after the price offered by banks pitching for the block trade was not attractive to the vendor.
Sources said bids came in around the $8 a share mark and none of the offers were for the entire stake.
ADM, which saw its 2013 GrainCorp takeover attempt blocked by the federal government after fierce opposition from the farm sector, had investment adviser Lazard run a "blind date" pitching process to sell its shares on Tuesday after share trading had ended on the Australian Securities Exchange (ASX).
GrainCorp shares had closed at $8.64, which would value the stake at $392 million.
The ADM offer pitted Goldman Sachs, Morgan Stanley and UBS's equities teams up against each other in a pitching contest seeking best price and terms.
Bids were due at 7pm on Tuesday, sources said.
While US-based ADM reserved the right to pull the sale or reduce the size of the trade, according to market analysts, the fact it had Lazard running the process was a clear signal to pitching banks and likely investors that it was keen to cut its GrainCorp ties.
However, GrainCorp could not confirm if ADM was intent on selling out.
GrainCorp company secretary, Murray Floyd, released a statement to the ASX saying the company was aware of reports by the Australian Financial Review about ADM’s process, but had no information and could not comment further.
ADM's move comes three years after its $3.4 billion bid to buy the former grower-owned company was blocked by Australia's then-Treasurer Joe Hockey.
ADM acquired the stake in 2012 as part of its controversial takeover attempt, opposed strongly by many graingrowers fearful the industry would be less competitive with such a powerful global player controlling much of its local storage and marketing infrastructure.
However, it has been sitting on GrainCorp's register as a frustrated investor for the bulk of the time since.
It's bitter-sweet news for GrainCorp.
While thoughts about another potential tilt by ADM have helped prop up the share price, it has also been a massive distraction for investors, if not management and the company's board as well.
Should ADM eventually sell, all attention will revert back to GrainCorp's flagging operational performance.
The group reported a 2.5 per cent slump in first half profit to $20 million in May, which was just the latest in a series of poor results as tough weather conditions weighed on grain volumes.
GrainCorp shares have traded to highs of $9 in the past month – well up from their five-year low of $7.47 in March – but still lagging behind the peak of $12.69 hit during ADM’s share buying scramble in May 2013.