GrainCorp shares fell more than 11% at one stage yesterday after Long Term Asset Partners walked away from $2.4 billion offer to buy the company.
GrainCorp’s statement revealing the abandonment of the bid was issued late on Monday and yesterday was the first day for investors to react which they did, in the usual way, by selling the company’s shares on the realisation there would be nothing in the deal for them.
The shares ended down 7% at $8.14.
Long-Term Asset Partners withdrew its conditional offer, just days before a deadline for a $350 million sale of part of GrainCorp to another party (That’s the bulk terminals business).
LTAP chairman Tony Shepherd said LTAP had been a very serious bidder with significant Australian and international backing.
“Had due diligence supported our operational assumptions, we are confident we would have turned the LTAP proposal into a binding offer as contemplated,” Mr Shepherd said.
“GrainCorp provides a valuable service to the nation’s grain growers and we wish them well,” he said in a statement.
In a statement released on Monday night GrainCorp said it had engaged extensively with LTAP as the group undertook due diligence, while in parallel, it had continued to run its own portfolio review which had resulted in a number of changes.
In March, Graincorp unveiled a $350 million deal to sell its liquids terminals business.
The deal was subject to certain conditions, including that Graincorp not enter into a change of control transaction before May 10, which effectively set an informal deadline for LTAP to confirm whether or not it would push ahead with its offer.
But the killer so far as the LTAP interest was the decision by GrainCorp to demerge its malt business which is where much of its recent growth has come from while its core grains handling and trading operation makes losses due t the intense east Coast Australia drought.
