SATURDAY marked the second anniversary of former treasurer Joe Hockey's rejection of Archer Daniel Midland's $3 billion bid for GrainCorp.
For 24 months the market has pondered what the US agribusiness giant might do with the 19.9 per cent stake it amassed. ADM has kept everyone guessing.
There are plenty of discussions, the latest involving whether a possible ADM exit from the register could trigger an acquisition and carve-up scenario. There appears to be plenty of interest in GrainCorp's malt operations, which are the fourth-largest in the world and operate about 90 per cent capacity, or higher than the industry average.
The malt industry globally has been contracting but GrainCorp is growing its North American business to capture increasing demand for craft beer - a product that uses two to three times the amount of malt than regular beer.
It's understood at least two Japanese maltsters have sounded out industry sources about the potential for an ADM exit to trigger a carve-up of GrainCorp.
The Australian Financial Review's Street Talk revealed this month the Illinois-based company had tested the appetite of some big Asian fund managers such as Temasek and GIC over a potential block trade for its 19.9 per cent. Sources said there have also been discussions with GrainCorp shareholders about the possibility about a block trade triggering a transaction that may throw out the malt assets.
Post-acquisition splits are not unusual in the agricultural space. Agrium, for example, quickly offloaded the AWB grain trading business to Cargill when it bought AWB in 2010.
GrainCorp paid top-of-the-market prices to become the world's fourth-biggest maltster in 2009, paying $757 million for United Malt Holdings. It later expanded the business and made some bolt-on acquisitions.
Macquarie values the business about $1.1 billion, based on an earnings multiple of 7 times, and Deutsche Bank puts it at $917 million.
It's been a tough month for GrainCorp.
Its shares are off about 10 per cent after downgrading its profit this month.
Interestingly GrainCorp's second biggest shareholder, Ellerston Capital, increased its stake after the grain handler's profit downgrade to 10.5 per cent, up from 9.3 per cent.
Perpetual has also increased its holding this month, lifting its position from 8.5 per cent to 9.7 per cent.
