The pricing of Archer Daniel’s (ADM) stock offering is pretty telling. Yes, I know is is not officially a “take over” fund, but, what else do they really need it for?
Archer Daniels Midland announced that it has priced its offering of up to $2 billion of equity units. ADM will issue 35,000,000 equity units with a stated amount of $50 per unit and has granted the underwriters an option to purchase up to 5,000,000 additional equity units to cover over-allotments. The equity units carry a total distribution rate of 6.25%, and the threshold appreciation price of the equity units is $47.83, which represents a premium of approximately 20% over the closing price of ADM’s common stock of $39.86 on May 28, 2008.
The equity units will initially consist of a contract to purchase ADM common stock and a 5.0% beneficial ownership interest in a $1,000 principal amount 4.70% debenture due June 1, 2041. Under the purchase contract, holders are required to purchase ADM common stock no later than on June 1, 2011.
With all the discounted equity offering we are seeing in the financial sector at Citi (C), Washington Mutual (WM) and USB (USB), it is refreshing to see an offering at a premium (and a pretty substantial one) to the current price.
The pricing reflects the core strength of ADM’s business and its prospects.
The only thing left is to see who they will buy or partner with……..
Disclosure (“none” means no position):
