Graincorp offer off table

Shares plunge as LTAP ends takeover moves

GRAINCORP shares have slumped more than 9 per cent after suitor Long-Term Asset Partners withdrew its $2.38 billion takeover offer.

The stock sagged yesterday following the bulk grains handler’s post-trade announcement on Monday that LTAP had withdrawn the nonbinding $10.42 per share offer it made in December 2018.

“Had due diligence supported our operational assumptions, we are confident we would have turned the LTAP proposal into a binding offer as contemplated,” LTAP chairman Tony Shepherd said in a separate release.

“Graincorp provides a valuable service to the nation’s grain growers and we wish them well.”

Shares in Graincorp were 6.74 per cent lower at $8.17 at 1035 AEST, having dropped by as much as 9.3 per cent at the open.

LTAP’s December 3 bid sent the company’s stock rocketing by as much as 34 per cent from a $7.30 price weighed down by a severe east coast drought.

GrainCorp, under chairman Graham Bradley (pictured), hit a 23-month high of $9.90 in February, but the share price has tailed away after drought wilted its summer crop and international trade tensions simmered, predominantly between the US and China.

Plans announced last month to demerge its global malting business briefly lifted GrainCorp shares, but those gains were offset when the company flagged a $40 million hit to half-year grains business earnings two weeks later.

Mr Bradley said at the time of the announcement that the board “believes that the demerger would unlock significant value for shareholders by establishing two unique and high-quality ASX-listed agribusinesses with focused management teams able to pursue independent strategies and growth opportunities.”

LTAP said it had assembled a team of finance, legal, grain industry and debt rating experts to assess GrainCorp from outside.

It said it had formal engagement with a ratings agency that provided an indicative Acategory rating for the proposed long-term capital structure.

GrainCorp stopped short of recommending the deal to its shareholders in December because of a lack of information.

Parallel to the offer, GrainCrop continued its portfolio review, including selling Australian bulk liquid terminals business to ANZ Terminals for $350 million and proposing to combine its grains and oils business.