AUSTRALIA'S biggest agribusiness, GrainCorp is poised to accept a third takeover bid - worth more than $3 billion - from its biggest shareholder, the commodity giant Archer Daniels Midland (ADM).
GrainCorp's board of directors has given the US suitor the green light to make an off-market takeover offer next week to acquire all the outstanding 80.1 per cent shares in the big eastern States grain business, subject to the satisfactory completion of limited confirmatory due diligence.
If successful, the deal would pay shareholders $12.20 a share, plus a dividend totalling $1/share.
If regulatory approvals are not achieved by October 1 an additional fully franked dividend of 3.5 cents per share will be paid each following month until regulatory conditions have been satisfied or waived, assuming GrainCorp is performing profitably over that relevant period.
US-based ADM's last offer made in November was for $12.20, and prior to that $11.75.
Directors this morning indicated they will recommend the ADM offer subject to no superior proposal appearing and the preparation of an independent expert determining that the ADM's proposal is fair and reasonable.
GrainCorp also wants regulatory conditions to be satisfied or waived before December 31 or the deal will be off.
The company has already permitted ADM to undertake a limited scope of confirmatory due diligence starting yesterday, until May 2.
ADM will make its takeover offer, subject to satisfactory completion of this due diligence, on or before 2 May.
The $13.20 payable to shareholders compares with Wednesday's GrainCorp share price of $11.87.
Agribusiness analyst with RBS Morgans Belinda Moore said ADM's revised offer was an attractive outcome for GrainCorp shareholders.
Based on her 2013 and 2014 financial year forecasts, the revised offer of equates to an earnings before interest tax depreciation and amortisation (EBITDA) multiple of 9.1 times and 9.8 times respectively.
However, if successfully completed, the total payments shareholders would have received from the time of ADM's first approach last October were equivalent to $13.55/share plus up to an additional 58 cents/share for those shareholders who captured the full benefit from franking on the dividends (equals $14.13).
After rebuffing the two previous offers from the Illinois-based multinational, GrainCorp chairman, Don Taylor, said his board believed the latest ADM offer highlighted the strategic value of the company's unique assets.
If successfully completed, ADM's total payments to GrainCorp shareholders since last October's first approach would be 15pc higher than ADM's initial offer.
Mr Taylor said ADM's persistence in its takeover plans for GrainCorp emphasised the company's enviable proximity to the fast growing Asian markets.
"GrainCorp will work with ADM to ensure that ADM's confirmatory due diligence requirements can be satisfied, following which a takeover offer would be made on the terms agreed," he said.
GrainCorp operates one of the world's largest grain storage, handling and logistics network based on seven ports and more than 270 grain receival sites in Queensland, NSW, Victoria and South Australia.
It also runs grain marketing operations in Australia and Europe and owns the world's fourth biggest barley malting operation, with 18 plants in North America, Europe and Australia.
It also has a 60pc stake in Australia's biggest flour business, Allied Mills.