SYDNEY (Reuters) - Australia’s GrainCorp Ltd (GNC.AX) still does not have enough information about a A$2.38-billion ($1.76-billion) takeover offer from a little-known asset manager to recommend the deal to shareholders, the nation’s largest listed bulk grains handler said.
The company wants information including the identities of the financial backers behind the all-cash proposal made on Dec. 3 by asset manager Long-Term Asset Partners (LTAP), which offered a near-43 percent premium to the stock’s previous closing price.
“The LTAP proposal at this stage is not sufficiently certain or in a form which would allow the board to make a recommendation to shareholders,” GrainCorp Chairman Graham Bradley said in a letter to shareholders on Wednesday.
Analysts have said the offer could be attractive to GrainCorp’s shareholders as it comes amid a drought that has wilted crops across Australia’s east coast, limiting the firm’s ability to earn revenue from international grain trading.
Two sources familiar with the matter said LTAP had told GrainCorp that it was reluctant to reveal the identities of its backers in case GrainCorp approached them directly, potentially cutting the asset manager out of any deal.
The sources declined to be identified due to the sensitivity of the matter.
LTAP, which previously said it was an asset manager for a trust whose beneficiaries were Australian investors, did not immediately respond to a request for comment on Wednesday.
“Its not very likely that the board can make some sort of recommendation in favor without the appropriate understanding of the structure of the deal,” one of the sources told Reuters.
Analysts have said the identity of LTAP’s financial backers would be a key determinant in the success of the bid. Australian takeover law means the deal will draw the attention of regulators, and should it transpire that LTAP has foreign backers, it will face additional obstacles.
Production of wheat, Australia’s largest rural commodity, is set to fall to a 23-year low, with the tough seasonal conditions prompting GrainCorp to review its assets, with sales of some divisions under consideration.
GrainCorp said on Wednesday that it expected to announce the results of the ongoing review of its portfolio of assets with shareholders at or before the annual general meeting on Feb. 20.
Shares in GrainCorp fell 2.6 percent on Wednesday, while broader Australian markets were largely steady.
Reporting by Aby Jose Koilparambil in Bengaluru and Colin Packham in Sydney; Editing by Leslie Adler and Joseph Radford