MELBOURNE, Oct 24 (Reuters) - Deutsche Bank has built a 5.2 percent stake in Australian takeover target GrainCorp in recent months, a move that could pay off handsomely as the target’s shares have soared and could climb even higher if rival bids appear.
U.S. agriculture giant Archer Daniels Midland bid $2.8 billion for GrainCorp this week, sending shares in Australia’s last remaining independent grains handler soaring to record highs.
Australian Stock Exchange filings show Deutsche Bank acquired a 5.2 percent stake in GrainCorp through a range of funds and units since June, suggesting the purchases were for investment rather than on behalf of a rival bidder.
Deutsche Bank declined to comment further on the shareholding notice.
Many analysts have argued the Archer Daniels’ bid, even at a 33 percent premium to its pre-offer price, undervalues GrainCorp based on past deals and expect either a sweetened offer from ADM or another suitor to emerge.
U.S. industry bankers told Reuters that Bunge and Cargill were no doubt evaluating rival bids.
“It wouldn’t surprise me to see Cargill take a good hard look along with Bunge, to see if the economics of the acquisition of GrainCorp work, the company is in play,” said a banker who asked not to be identified because he was not authorized to speak with the media.
“There have been a number of consolidations in the (agricultural) sector and ADM hasn’t participated,” the banker said. “I think they’re determined to win this and obviously they’ve taken a very aggressive approach here.”
Cargill and Bunge declined to comment on whether they had any interest in GrainCorp.
“It’s still in play. Anything’s possible,” said Paul Xiradis, chief executive at fund manager Ausbil Dexia, which owns shares in the Australian grains group.
ADM’s bid comes at a time of consolidation in the global grains sector as fast-developing countries seek food security.
Australia is a coveted market with a stable policy regime and good links to Asia. After a string of deals, GrainCorp is the last available asset, which can give full access to the world’s second-biggest wheat exporter. Cargill and GrainCorp have a joint venture in their ownership of Allied Mills, a flour producer in Australia.
GrainCorp has said it was reviewing the offer by ADM, which has a 14.9 percent stake in the firm now.
GrainCorp operates seven of the eight bulk grain elevators in eastern Australia, handling as much as 60 percent of the region’s wheat, barley, canola, chickpea and sorghum crops.
Credit Suisse and Greenhill are advising GrainCorp.
Aside from Cargill and Bunge, analysts have named potential rival bidders including China’s Bright Foods, Singapore’s Wilmar and commodities trader Louis Dreyfus.
GrainCorp shares last traded at A$12.17, compared with the A$11.75 a share bid from ADM.