SYDNEY Dec 20 Australia's GrainCorp
forecast on Thursday a drop of as much as fifth in the grain it
receives from farmers next year as it defended its rejection of
a sweetened $2.9 billion takeover offer from U.S. suitor Archer
Analysts still expect ADM to lift its bid, as it targets the
purchase to give it a doorway to supply fast-growing Asia
nations seeking food security, but a significant hike is
GrainCorp executives are also set to face questions from
shareholders at their annual meeting on Thursday amid concerns
from some that ADM could still walk away from the deal.
The Australian grains handler said in a statement it
expected to receive 10-11 million tonnes of grain from farmers
in 2013 -- down from 12.2 million tonnes this year and 14.9
million tonnes in 2011.
Still, GrainCorp Chairman Don Taylor said the outlook for
2013 was strong and the company repeated that a revised offer
from ADM still "materially undervalues GrainCorp."
"The board's confidence in the outlook is reinforced by the
strong and growing tailwinds provided to the company by rising
demand for protein and changing dietary habits through the
growing middle class in the Asian region," Taylor said in a
"GrainCorp's assets and expertise are ideally and
competitively positioned to play a substantial role as the
global trade of grain doubles in the coming years," he added.
Grains, food and agricultural businesses in Australia, the
world's second-largest wheat exporter and an attractive market
due to stable policies and good links to Asia, have been snapped
up by large global players in recent years.
GrainCorp operates seven of the eight bulk grain elevators
in eastern Australia, handling as much as 60 percent of the
region's wheat, barley, canola, chickpea and sorghum crops.
ADM's revised offer of A$12.20 per share in cash, a 3.8
percent improvement on its original $2.8 billion approach in
October, was still below the average acquisition multiple for
Australian and global agribusinesses based on forward earnings.
Some analysts have said Graincorp may deal at a price above
$13 a share, but others think that would over value the
Australian bulk grain handler.
This year's bumper crop delivered a record annual net
profit, but GrainCorp's earnings are forecast to slide as
Australia's grains harvest retreats from record levels due to
dry weather in key growing areas.
The company forecast bulk grain exports at 8 to 8.5 million
tonnes next year, compared with a record this year of 10.6
The overall eastern Australia harvest was forecast at 18.2
million tonnes, compared with 18.3 million tonnes this year, it
added in a statement.
Some shareholders have been cited in media reports
expressing fears that ADM, which has built up a 19.9 percent
stake in GrainCorp, could walk away.
Analysts have warned the U.S. agribusiness giant needs to be
careful it does not risk its access to short-term funding by
damaging its credit ratings with an offer.