Continuing my global tour of ag companies, today's subject is GrainCorp (OTCPK:GRCLF)
(GNC.AX) - an Australian grain handling/storage company that is also a
significant global player in malt and a regional player in edible oils.
GrainCorp is probably best known as the target of Archer Daniels Midland's (ADM)
unsuccessful takeover attempt in 2013, as the Australian government
wanted to protect a "national champion" in a strategic sector.
GrainCorp
doesn't appear to be the investment opportunity that I had hoped to
find. Not only is the company facing near-term challenges from a
potential El Nino weather cycle and global overcapacity in the malt
industry, there is also growing competitive risk as rivals are building
their own east coast port facilities. I do believe that GrainCorp still
holds a lot of value for a company like ADM, and I believe the
government of Australia could be more receptive to a takeover bid a few
years from now, but I don't generally like investment situations where
so much of the value is underpinned by future M&A potential.
Follow this link for more:
Graincorp Not Strikingly Cheap Amidst Multiple Challenges
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