Long-Term Asset Partners has withdrawn its stalled takeover bid for ASX-listed GrainCorp.
GrainCorp announced on 3 December 2018 that the newly formed asset manager had made an offer of A$10.42 ($7.31; €6.53) per share to acquire 100 percent of the company. LTAP entered into due diligence soon afterwards.
Since then, however, GrainCorp has announced the proposed demerger of its malt business and an agreement to sell its bulk liquid terminals in Australia and New Zealand, alongside other measures in a strategic review.
LTAP did not provide any specific reasons for withdrawing its bid. However, market observers have suggested that GrainCorp’s demerger in particular would have made the takeover less attractive.
LTAP said it had obtained a financing package for its bid that enabled it “to provide an unusually high degree of certainty before conducting any confidential due diligence”.
The package included leverage comprising A$3.2 billion in acquisition facilities from Goldman Sachs and A$400 million from infrastructure debt specialist Westbourne Capital.
The asset manager had also obtained commitment letters and terms sheets from an “internationally recognised insurer” to provide a swap linked to grain volumes that would smooth out the volatility in the grain market on Australia’s east coast. The Australian media reported that the insurer was Allianz.
LTAP also acquired approximately 4.2 percent of GrainCorp’s shares in preparation for the bid.
In a statement, the asset manager’s chairman Tony Shepherd said: “LTAP was a very serious bidder, with significant Australian and international backing across the proposed transaction. Had due diligence supported our operational assumptions, we are confident we could have turned the LTAP proposal into a binding offer as contemplated.
“GrainCorp provides a valuable service to the nation’s growers and we wish them well.”
A spokesman for LTAP told sister publication Agri Investor: “LTAP doesn’t have any plans at present to pursue other acquisitions.”