What: According to a report in The Age newspaper leading grain handler and marketer Graincorp Ltd (ASX: GNC) is seeing renewed investor interest thanks to the change in Prime Minister.
Back in late 2013 the Federal Treasurer prohibited the takeover offer from Canadian-based Archer-Daniels-Midland (ADM) Company for Graincorp under the Foreign Acquisitions and Takeovers Act.
ADM had offered to acquire all of Graincorp's shares for a total consideration of $13.20 per share which represented a 49% premium to the closing price pre its initial offer.
Since the intervention from the Federal Government the shares have slumped to trade mostly in the $8 range.
So What: The market appears to be speculating that a suitor, possibly even a new bid from AMD which has retained a holding of around 20% in Graincorp could receive a more favourable hearing from the Government's new leadership team.
Now What: Graincorp operates on a September year-end. For the six months ending March 31 the company reported a drop in operating net profit after tax (NPAT) to $35 million.
Management also provided guidance for a full year operating NPAT of between $45 million and $60 million which doesn't make the stock look particularly cheap at its current market capitalisation of $2 billion, let alone once allowing for a takeover premium.
With foreign takeovers of AWB and ABB having already occurred, it could be a matter of when rather if a suitor once again comes knocking for Graincorp and its strategic asset base.
Given the expected growth in demand from Asia for Australian food and beverage it is understandable that leading agricultural companies such as Graincorp, along with others such as Elders Ltd (ASX: ELD), Ruralco Holdings Ltd (ASX: RHL) and Australian Agricultural Company Ltd (ASX: AAC) may potentially find themselves with interested parties taking a closer look at acquiring them.
