Goldman Sachs Comments on News of Archer-Daniels-Midland Company's Proposed Acquisition of GrainCorp Being Blocked by Australian Government

In a report published Friday, Goldman Sachs analyst Adam Samuelson reiterated a Buy rating and $42.00 price target on Archer-Daniels-Midland Company (NYSE: ADM).In the report, Goldman Sachs noted, “Late Thursday, the Australian government announced that it would block ADM's proposed $3.1bn acquisition of GrainCorp. The Australian Treasurer, Joe Hockey, ruled that the proposed acquisition was ‘contrary to the national interest' after the Foreign Investment Review Board (FIRB) could not make a unanimous recommendation on the deal. ADM already owns 19.85% of GrainCorp shares (acquired at a weighted average price of A$11.24/share), which under terms of the takeover agreement must be retained until at least December 31, 2013. Following the Australian government's announcement, ADM management released a statement indicating that they are ‘reviewing our capital allocations, including shareholder distribution alternatives, as part of our 2014 business plan process currently underway'. We believe this signals ADM's management willingness to redeploy a portion, if not all, of the targeted capital for the GrainCorp acquisition towards share repurchases. ADM retains significant balance sheet flexibility, in our view, with 3Q13 TTM net debt/EBITDA of 1.1x and liquidity of >$10bn (cash on hand, CP capacity and other credit facilities).”Archer-Daniels-Midland Company closed on Wednesday at $41.49.