Seeking Alpha: Graincorp Not Strikingly Cheap Amidst Multiple Challenges

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.

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Graincorp Not Strikingly Cheap Amidst Multiple Challenges

Investopedia: Afer A Strong Recovery, What Moves ADM From Here?

I've had a love/worry relationship with Archer Daniels Midland (NYSE:ADM) for a while now, as I do believe that the Street is often too negative about a business that is admittedly very low-margin and unpredictable. With the stock up more than one-third from its November 2012 lows, though, it is harder to argue that the stock is unfairly neglected by the Street. Longer-term opportunities in Asia will take time to materialize, which makes a strong U.S. crop and the speedy close and integration of GrainCorp all the more important.

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http://www.investopedia.com/stock-analysis/061213/after-strong-recovery-what-moves-adm-here-adm-bg-ingr-agro-czz.aspx