Leading US agribusiness Bunge and Glencore-backed Viterra have announced they would be merging to create an approximately US$34bn agricultural trading giant, Reuters reported.
Bringing the combined company closer in scale to leading rivals Archer Daniels Midland (ADM) and Cargill, the deal valued Bunge and Viterra at around US$17bn each and was likely to draw close regulatory scrutiny, the 13 June report said.
As Bunge would be paying for a significant percentage of the deal with cash, its shareholders would own about 70% of the combined company, Reuters wrote.
Under the terms of the deal, Viterra shareholders would get about 65.6M shares of Bunge stock, with a value of around US$6.2bn, and about US$2bn in cash, the report said.
According to a joint statement reported by Reuters, Bunge would also assume US$9.8bn of Viterra’s debt.
Bunge is currently the world’s leading oilseed processor and analysts were quoted as saying the company and Viterra’s crushing businesses could face regulatory scrutiny in Canada and Argentina, the report said.
According to data from shipping agent Cargonave, last year, Bunge was the largest corn and soyabean exporter from Brazil – the feedstocks for producing animal feed and biofuels. Viterra was the third-largest corn exporter and seventh largest global soyabean shipper.
When combined, the companies accounted for about 23.7% of Brazilian corn exports in 2022 and 20.9% of Brazilian soyabean exports, according to Cargonave data.
In the USA, Viterra’s business of buying and selling grain expanded following its acquisition of the grain and ingredients business of US oilseed and ingredients firm Gavilon last year, while the merger would enhance Bunge’s US grain exporting and oilseed processing businesses, Reuters wrote.
However, the deal would reduce competition for farmers’ crops and consolidate oilseed processing for plant-based foods as well as biofuel, the Consumer Federation of America was quoted as saying.
“Further concentration seems likely to harm consumers and the businesses, like plant-based food manufacturers, that rely on these commodities,” the federation’s director of food policy Thomas Gremillion, said.
In early 2017, Viterra – then known as Glencore Agriculture – had approached Bunge about a friendly takeover but that had been rejected, the report said. Since then, Bunge had replaced its CEO and other senior executives.
Bunge’s management team, led by CEO Greg Heckman would now oversee the combined Viterra/Bunge entity, Reuters wrote.
