The Canadian government has approved global agribusiness giant Bunge Global’s deal to acquire Glencore’s agriculture division, Viterra, but with a range of conditions, World Grain wrote on 16 January.
Canada’s minister of transport and internal trade Anita Anand announced approval of the US$18bn transaction on 14 January.
Bunge and Viterra first announced they had agreed to a merger in June 2023 that would create one of the world’s largest agribusiness companies, moving it closer in size and scope to leading agribusiness giants Cargill and ADM, World Grain wrote in an earlier report in August.
The government’s decision came with “extensive terms and conditions” to safeguard competition in Canada and secure benefits for the nation’s economy, Anand added.
In particular, the Canadian government aims to prevent the planned merger from infringing on competition in the country’s grain and oilseed sector – specifically grain purchasing in Western Canada and the sale of canola oil in Central and Atlantic Canada, according to Transport Canada.
Among the conditions, Canada called on Bunge to divest six grain elevators in Western Canada to maintain competitive balance for farmers in the region, as well as to retain Viterra’s head office in Regina, Saskatchewan, Canada, for at least five years to help “protect Canadian jobs”, World Grain wrote.
To uphold fair pricing and market stability, the government said it also required a price protection programme “for certain purchasers of canola oil” in Central and Atlantic Canada, along with “strict and legally binding controls” on Bunge’s minority ownership stake in G3, a Canada-based operator of grain elevators and export terminals, to ensure Bunge “cannot influence G3’s pricing or investment decisions”.
Canada also sought a binding commitment from Bunge to invest at least US$520M in the nation within the next five years and outlined more than 20 further conditions aimed at enhancing the public’s benefits from the acquisition of Viterra.
According to Transport Canada, the conditions would give farmers “a wide range of competitive options” when selling canola and other crops and enable them to “continue to receive fair prices” for their produce.
However, the approval of the merger did not go far enough to protect market competition for Canadian farmers, the Grain Growers of Canada (GGC) group was quoted as saying in a World Grain report on 17 January.
Saying it was “extremely disappointed” by Anand’s decision, the GGC said it was particularly of note that the conditions did not include Bunge’s divestment of G3, which is 75% owned by the Saudi Agricultural and Livestock Investment Company (SALIC) and 25% owned by Bunge.
G3 Global Holdings is the majority owner of G3 Canada, which operates 19 grain elevators in Western Canada and one in Quebec, as well as port terminals in Thunder Bay and Hamilton in Ontario and Quebec City and Trois-Rivières in Quebec.
Viterra and G3 compete for crops such as canola, wheat, durum, rye, barley, peas, corn and soyabeans across Western Canada, according to the report.
“Minister Anand’s decision to approve the acquisition, even with conditions, doesn’t go nearly far enough,” Kyle Larkin, executive director of GGC, which represents over 65,000 producers, was quoted as saying.
Additional concerns raised by GGC included the market concentration of grain terminals at ports in Quebec and the merger’s implications on an announced canola crushing facility in Regina, Saskatchewan.
In late April 2024, Canada’s Competition Bureau concluded that Bunge’s proposed acquisition of Viterra was “likely to result in substantial anti-competitive effects” and a “significant loss” in Bunge and Viterra’s competition in Canadian agricultural markets. The bureau’s report was then passed to the minister of transport for review, World Grain wrote.
Transport Canada said the conditions it imposed on the deal addressed concerns raised about the Bunge-Viterra merger deal during the public assessment period required under the Canada Transportation Act.
However, GGC’s Larkin said it was a “missed opportunity to protect competition in Canada’s grain sector and prioritise the interests of producers”.
“We are urging the government to revisit these conditions, strengthen measures to foster competition, and take meaningful steps to support Canada’s grain farmers,” he added.
At the time of the initial announcement of the merger, Bunge and Viterra said they expected the transaction to close in mid-2024, pending customary closing conditions and approvals by Bunge shareholders and regulators.
However, delays in securing regulatory clearance from around the globe had pushed back that timeline, World Grain wrote.
Bunge shareholders approved the deal in October 2023, while the European Commission gave the merger the go-ahead in August.
