THE BID for ABB Grain from Canadian grain industry giant Viterra remains well and truly on track – bolstered by the support of some of ABB’s largest shareholders.
While ABB retains a 10 per cent shareholder cap, there are some major corporate investors holding large parcels of shares – and they are in favour of the arrangement – saying it frees ABB up from the climatic constraints that have confronted it in recent years.
Amit Wadhwaney, portfolio manager at US-based Third Avenue Management, which controls 9.05pc of ABB, said grower shareholders would get a far less risky and potentially more profitable entity if they owned a combined company.
"ABB will forever be subject to local weather patterns," he said.
"This liberates them. If you are a grower, already exposed to those weather patterns, then you would like to diversify and this should be a big plus."
Viterra last week confirmed it was in talks to acquire ABB for up to $1.6 billion.
Mr Wadhwaney's comments underscore the view that ABB's international shareholders, many of which (like Third Avenue) are also major holders of Viterra, will back the transaction.
It is understood the offer from Viterra has been pitched at $9.15 to $9.20 a share and has won the support of most of ABB's board, subject to due diligence being conducted.
ABB shares have come back 2.86pc in the past week, dropping from a high of $8.75 to $8.50, but it is still up over 20pc on the trading range around $6.20 before the Viterra news came in – although analysts have not broken down the impact of the takeover bid versus the solid opening break in southern Australia.
Meanwhile, rank and file grower shareholders still hold reservations regarding the terms of the bid, suggesting the company may be undervalued should 2009 mark the first average or better year in south-eastern Australia since 2005.
*Extract from full article to appear in Stock & Land, May 7.
