Agri-products and salt company Ridley Corporation has firmly rejected the merger proposal from grain handling group Graincorp, pointing at the bidder's crumbing share price, its erratic dividend payments and the inexperience of its management team.

Graincorp launched its one-for-nine share bid in May in an attempt to try and gatecrash Ridley Corp's proposed restructuring. The stock offer then valued the target at $592 million, but a 42 per cent slump in its own share price since then has reduced the value of the offer dramatically.

In its target statement today, Ridley said the effect of that share price was to offer an effective 27 to 38 per cent discount to Ridley shares, depending on the original value point. It also noted Graincorp's dividend payment had been suspended for the first half of the most recent financial year because of drought conditions and pointed to the inexperience of Graincorp's recently appointed CEO Mark Irwin, who was both new to the company and to the role of CEO in a listed company.

Ridley said defending the bid was a distraction for its management and "expensive". However, it did not break down the expected transaction costs, or the fees to be charged by advisors Gresham Partners and legal firm Allens Arthur Robinson.

Those fees might be similar to Graincorp's, which revealed in its bidder's statement earlier this month that advisor Lazard Carnegie Wylie would be paid about $4 million for its services, legal firm Mallesons Stephen Jaques would get about $500,000, while investigating accountant and tax advisor KPMG would receive about $200,000.

Ridley has also hired Gresham Partners and CIBC World Partners to seek buyers for its stake in Ridley Inc, which is worth around $80 million. That process is continuing and the company is talking to various parties after expressions of interest were lodged at the end of June.
Agri-products and salt company Ridley Corporation has firmly rejected the merger proposal from grain handling group Graincorp, pointing at the bidder's crumbing share price, its erratic dividend payments and the inexperience of its management team.

Graincorp launched its one-for-nine share bid in May in an attempt to try and gatecrash Ridley Corp's proposed restructuring. The stock offer then valued the target at $592 million, but a 42 per cent slump in its own share price since then has reduced the value of the offer dramatically.

In its target statement today, Ridley said the effect of that share price was to offer an effective 27 to 38 per cent discount to Ridley shares, depending on the original value point. It also noted Graincorp's dividend payment had been suspended for the first half of the most recent financial year because of drought conditions and pointed to the inexperience of Graincorp's recently appointed CEO Mark Irwin, who was both new to the company and to the role of CEO in a listed company.

Ridley said defending the bid was a distraction for its management and "expensive". However, it did not break down the expected transaction costs, or the fees to be charged by advisors Gresham Partners and legal firm Allens Arthur Robinson.

Those fees might be similar to Graincorp's, which revealed in its bidder's statement earlier this month that advisor Lazard Carnegie Wylie would be paid about $4 million for its services, legal firm Mallesons Stephen Jaques would get about $500,000, while investigating accountant and tax advisor KPMG would receive about $200,000.

Ridley has also hired Gresham Partners and CIBC World Partners to seek buyers for its stake in Ridley Inc, which is worth around $80 million. That process is continuing and the company is talking to various parties after expressions of interest were lodged at the end of June.