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GrainCorp Trades at 33% Premium Sparks Speculation of a Bid

Two block trades in GrainCorp Ltd. worth A$536 million ($556 million) at a premium of 33 percent to its previous close sparked speculation of a pending takeover bid for eastern Australia’s largest grain handler.

The two block trades of 22.8 million shares apiece went through at 7:05 a.m. in Sydney at A$11.75 a share. Sydney-based GrainCorp closed yesterday at A$8.85. Angus Trigg, director of government and media relations for GrainCorp, didn’t immediately return two phone messages requesting comment.

Such a trade “certainly would suggest that the company would be in play, particularly at this sort of premium,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone.

GrainCorp, which had a market value of A$2 billion at yesterday’s close, operates seven of the eight ports that ship grain in bulk from Australia’s east coast and has a “virtual, natural monopoly” on the eastern seaboard, according to Justin Crosby, a policy director at the Sydney-based NSW Farmers’ Association, which represents 10,000 members, half of them grain growers.

GrainCorp, which traces its roots to 1916 and the Grain Elevators Board of the New South Wales state agriculture department, handles as much as 60 percent of eastern Australia’s grain crop and has about 20 million metric tons of storage at more than 280 inland grain handling sites, according to the company.

Its revenue has surged since Australia’s 2006 decision to strip AWB Ltd. of an export monopoly, after an inquiry found it was among firms that made illegal payments to win contracts from the former Iraq regime of Saddam Hussein under the United Nations’ oil-for-food program.

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