Record GrainCorp earnings to lift case for higher ADM bid

* GrainCorp seen posting 20 pct rise in net profit to record

* Strategic role adds to case for higher bid-analysts

* GrainCorp holding out for 15-20 pct higher bid-sources

SYDNEY, Nov 15 (Reuters) - Australian grains handler and

takeover target GrainCorp is expected to report a 20

percent rise in annual profit to a record level on Thursday,

boosting the case for a higher bid from suitor Archer Daniel

Midland Co.

GrainCorp is yet to respond to Archer Daniel's $2.68 billion

($2.80 billion) October bid. Two sources familiar with the

process said GrainCorp is holding out for an offer that would be

up 15 to 20 percent higher and is assessing interest from rival

global food and agriculture companies.

Other sources have said Russian investment and trading group

Summa has sought funding for a possible bid. However, among a

long list of other potential bidders -- including Cargill

, Bunge, Louis Dreyfuss, Singapore's Wilmar

International, China's Bright Food Group

and COFCO -- there is little sign that any are ready

to make a counter-offer.

A spokesman for GrainCorp declined to comment.

Archer Daniel's bid comes at a time of dramatic

consolidation in the global grains sector amid intense

competition to feed fast-developing countries seeking 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 independent asset of scale.

"ADM's bid is an endorsement of the quality of the business

and its strategic positioning," said RBS analyst Belinda Moore,

who is recommending clients hold out for a higher offer.

"Australian agriculture has quality, freight and

traceability advantages and is also seen as the food bowl or the

gateway to Asia," she said.

A 15 to 20 percent sweetened offer would raise the bid

closer to A$14 a share and put it right at the top end of past

deals that were valued at 9 to 10 times earnings before

interest, depreciation and amortization (EBITDA). The current

offer values GrainCorp at about 8 times EBITDA.

GrainCorp shares closed at A$12.18 on Wednesday, 3.7 percent

above the A$11.75 a share offer price

The grains handler is currently at the peak of its earnings

cycle, buoyed by a strong harvest and record carry tonnage. Its

earnings are expected to drop off over the next two years as

harvest sizes retreat from last season's record.

Adjusted net profit, which excludes one-off items, is

expected to jump 20 percent this year to a record A$206 million,

but fall to A$177.8 million in 2012/13 and to A$142.7 million

the next year, according to Thomson Reuters I/B/E/S data.

"The (deal value) really depends on the 2013 outlook, and it

hasn't been the best finish (to the growing season)," Jonathan

Snape, analyst at Bell Porter said.

Investors are still hoping for a higher bid given

GrainCorp's strategic positioning. It 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. It has about 20 million metric tons

of storage at more than 280 inland grain handling sites,

according to its website.

"GrainCorp's core infrastructure and ports facilities are

scarce assets with meaningful barriers to entry. Unrivalled

proximity to fast growing markets deserves a significant premium

for control," UBS analyst Lachlan Parker said.

Source: http://news.yahoo.com/record-graincorp-earnings-lift-case-higher-adm-bid-150126408--sector.html

invincible jesse jackson whitney houston funeral video tyler perry whitney houston r kelly r. kelly macular degeneration