Agro: Bunge and Viterra merge for US$ 34 billion – 06/13/2023 – Market

U.S. grain trader Bunge and Glencore Inc’s Viterra are merging to create a roughly $34 billion agricultural trading giant, the companies announced Tuesday. , in a deal likely to attract rigorous regulatory scrutiny.

The agreement brings Bunge closer on a global scale to its main competitors, Archer-Daniels-Midland and Cargill. Bunge shares fell 2.5% to US$91.45 (R$444.45) in premarket trade.

Under the terms of the agreement, Viterra shareholders will receive approximately 65.6 million Bunge shares, worth approximately US$6.2 billion (R$30.13 billion), and approximately US$2 billion (R$ 9.72 billion) in cash.

Bunge is already the world’s biggest oilseeds processor and analysts have said its crushing businesses and those of Viterra could face regulatory scrutiny in Canada and Argentina.

Last year, Bunge was the largest exporter of corn and soybeans in Brazil, the world’s main source of basic crops for the manufacture of animal feed and biofuels, according to data from the transport company Cargonave. Viterra was the third largest exporter of corn and the seventh largest exporter of soybeans.

Combined, the companies accounted for about 23.7% of Brazilian corn exports in 2022 and 20.9% of Brazilian soy exports, data from Cargonave showed.

In the United States, Viterra’s grain buying and selling business expanded with the acquisition of Gavilon last year. The merger would grow Bunge’s grain export and oilseeds processing business in the world’s second-largest exporter of corn and soybeans, where it has a smaller presence than ADM and Cargill.

The deal also expands Bunge’s physical grain storage and handling capacity in Australia, a major wheat exporter, where the company currently operates just two grain elevators and a port terminal in the western part of the country. Viterra has 55 storage sites in South Australia and West Victoria and six bulk grain export terminals.

Bunge’s management team, led by CEO Greg Heckman, who took over in 2019 when the company itself was a takeover target, will oversee the combined entity. Bunge said it plans to buy back US$2 billion (R$9.72) of its shares to increase the addition to adjusted earnings resulting from the deal.

Viterra shareholders will own 30% of the combined company upon the expected closing of the deal in mid-2024, and approximately 33% upon completion of the buyback plan.

The world’s biggest producer of vegetable oils has also partnered with oil company Chevron and seed and chemical giant Bayer to chase growing demand for renewable fuel feedstocks.

In Ukraine, the world’s largest sunflower producer and largest supplier of sunflower oil, a Bunge-Viterra combination 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 US$ 67.2 billion (about R$ 326 billion) in 2022, more in line with that of ADM, which recorded sales of almost US$ 102 billion (R$ 495 billion) last year.

In early 2017, Viterra, then known as Glencore Agriculture, tried to acquire Bunge, which was valued at US$11 billion (R$53.46 billion). The takeover attempt was rejected. The merger is expected to generate approximately US$250 million (R$1.215 billion) of pre-tax gross operating synergies annually within three years.