CHICAGO, June 13 (Portal) – US grain trader Bunge (BG.N) and Glencore (GLEN.L)-backed Viterra are merging to create a roughly $34 billion agri-trade giant, the companies said on Tuesday with are likely to be subject to close regulatory scrutiny.
The deal brings Bunge closer to leading rivals Archer-Daniels-Midland (ADM.N) and Cargill (CARG.UL) on a global scale.
Bunge shares are down 2.5% in premarket trading at $91.45.
As part of the deal, Viterra shareholders will receive approximately 65.6 million shares of Bunge worth approximately $6.2 billion and approximately $2 billion in cash.
According to the statement, Bunge will also assume $9.8 billion of Viterra’s debt.
Bunge is already the world’s largest oilseeds processor, and analysts said Bunge and Viterra’s crushing businesses in Canada and Argentina could face regulatory scrutiny.
Bunge was the top corn and soybean exporter from Brazil last year, the world’s top supplier of staples used to make animal feed and biofuels, according to freight forwarder Cargonave. Viterra was the third largest exporter of corn and the seventh largest shipper of soybeans.
Combined, the companies accounted for about 23.7% of Brazil’s corn exports and 20.9% of Brazil’s soybean exports in 2022, Cargonave data showed.
In the United States, Viterra expanded last year with the purchase of Gavilon into buying and selling grain. The merger would strengthen Bunge’s grain export and oilseed processing businesses into the second-largest corn and soybean exporter in the world, where the company has a smaller footprint than ADM and Cargill.
The deal expands Bunge’s physical grain storage and handling capacity in major wheat exporter Australia, where the company currently operates just two grain elevators and a port terminal in the western part of the country. Viterra has 55 storage locations in South Australia and West Victoria and six bulk grain export terminals.
Bunge’s management team, led by CEO Greg Heckman, who took the leadership role in 2019 when the company itself was an acquisition target, will oversee the combined company.
Heckman led a portfolio review that prompted Bunge to downsize or sell underperforming operations like South American sugar and Mexican wheat mills and invest in its core cooking oils business. The company reported record profits last year after a string of quarterly losses in 2018. Heckman previously managed Gavilon from 2008 to 2015.
Bunge said it plans to repurchase $2 billion of its stock to bolster the adjusted earnings increase from the transaction.
Viterra shareholders will own 30% of the combined company upon expected closing of the transaction in mid-2024, and approximately 33% upon completion of the buyback plan.
World-leading vegetable oil producer Bunge has also partnered with oil giant Chevron (CVX.N) and seed and chemical giant Bayer (BAYGn.DE) to meet rising demand for renewable fuel feedstocks.
In Ukraine, the world’s largest sunflower producer and largest supplier of sunflower oil, a combined Bunge-Viterra would have three oilseed processing plants in the south and east of the country – in Kharkiv, Dnipro and Mykolaiv.
The acquisition of Viterra would bring Bunge’s revenue, which was $67.2 billion in 2022, more in line with that of ADM, which posted nearly $102 billion in revenue last year.
In early 2017, Viterra, then known as Glencore Agriculture, attempted a takeover of Bunge, which was then valued at $11 billion. The attempt was rejected.
The merger is expected to generate approximately $250 million in pre-tax annual gross synergies over three years.
Reporting by Karl Plume in Chicago, Anirban Sen in New York, and Arunima Kumar and Mrinalika Roy in Bengaluru. Edited by Caroline Stauffer, Matthew Lewis and Devika Syamnath
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