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Australian Grain Handler Rejects Latest ADM Takeover bid

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CEDAR RAPIDS, Iowa - GrainCorp, the largest publicly-traded agricultural business in Australia, has rejected Archer Daniels Midland's latest takeover bid, saying it "materially undervalues" the grain handler.

Decatur, Ill.-based ADM, with significant grain processing facilities in Cedar Rapids and Clinton, sweetened a $12.40-per-share (in U.S. dollars) initial offer to $12.87 per share on Dec. 3. That would value the deal for Sydney-based GrainCorp at about $2.9 billion.

If GrainCorp ultimately agrees to a deal, it would be the largest acquisition in ADM's history. GrainCorp handles 90 percent of eastern Australia's bulk grain exports through seven storage and loading facilities.

Australia is the second-largest wheat exporter in the world. ADM is one of the world's largest agricultural traders, handling corn, soybeans and other agricultural commodities.

In a statement responding to ADM's latest offer, GrainCorp said its board "will be constructive in any dealings in relation to proposals that have the potential to be in the best interests of shareholders." Analysts believe GrainCorp's board is holding out for an offer of $13.71 per share.

ADM, responding to GrainCorp's latest rebuff, said "our revised proposal represented a substantial premium to the prevailing GrainCorp share price at the time of our first approach. We believe that our revised proposal properly values GrainCorp's business, taking into account GrainCorp's 2012 results and its new initiatives announced on Nov. 15."

ADM added that its proposal offers more certainty, greater value and immediate realization of potential future value for GrainCorp shareholders than the Australian company's stand-alone plan.

ADM's advisers believe GrainCorp deserves a lower bid because Australian agricultural companies have more volatile earnings due to unpredictable weather patterns. GrainCorp is expected to handle 30 percent less wheat for export this year than it did in 2011 and at least four previous years.

GrainCorp closed at $12.98 per share Wednesday, 1.87 percent below its 52-week high of $13.22, set on Oct 22.

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