CHICAGO, June 13 (Reuters) – U.S. grains merchant Bunge (BG.N) and Glencore (GLEN.L)-backed Viterra are merging to create an agricultural trading giant worth about $34 billion including debt, the companies said on Tuesday, in a deal that will likely draw close regulatory scrutiny.
The deal brings the combined company closer in global scale to leading rivals Archer-Daniels-Midland (ADM.N) and Cargill (CARG.UL), valuing Bunge and Viterra at about $17 billion each. Bunge shareholders, however, will own about 70% of the combined company, because Bunge will pay for a significant chunk of the deal with cash.
Shares of Bunge fell 2.5% to $91.45 in premarket trading.
Under the deal, Viterra shareholders will get about 65.6 million shares of Bunge stock, carrying a value of about $6.2 billion, and about $2 billion in cash.
Bunge will also assume $9.8 billion of Viterra’s debt, according to a joint statement.
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Bunge is already the world’s largest oilseed processor and analysts said it and Viterra’s crushing businesses could face regulatory scrutiny in Canada and Argentina.
Last year, Bunge was the largest corn and soybean exporter from Brazil, the world’s top source of the staple crops for making animal feed and biofuels, according to data from shipping agent Cargonave. Viterra was the third-largest corn exporter and No. 7 soybean shipper.
Combined, the companies accounted for about 23.7% of Brazil corn exports in 2022 and 20.9% of Brazil soybean exports, Cargonave data showed.
In the United States, Viterra’s business of buying and selling grain expanded via its purchase of Gavilon last year. The merger would enhance Bunge’s grain exporting and oilseed processing businesses in the world’s No. 2 corn and soy exporter, where it has a smaller presence than ADM and Cargill.
The deal also 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 sites in South Australia and western Victoria and six bulk grain export terminals.
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Bunge’s management team, led by CEO Greg Heckman who took over the top role in 2019 when the company itself was a takeover target, will oversee the combined entity.
Heckman oversaw a portfolio review that led Bunge to scale back or sell underperforming operations such as South American sugar and Mexican wheat milling, and invest in its core edible oils business. The company reported record earnings last year after a string of quarterly losses in 2018. Heckman previously led Gavilon from 2008 to 2015.
The Consumer Federation of America said the deal would reduce competition for farmers’ crops and consolidate processing of oilseeds used to make plant-based foods as well as biofuel.
“Further concentration seems likely to harm consumers and the businesses, like plant-based food manufacturers, that rely on these commodities,” said Thomas Gremillion, director of food policy for the Federation.
Bunge said it plans to repurchase $2 billion of its stock to enhance accretion from the deal to adjusted profit. The deal is being backed by a financing commitment of $7 billion from Sumitomo Mitsui Banking Corporation (SMBC).
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Viterra shareholders will own 30% of the combined company following the deal’s expected close in mid-2024, and about 33% after completion of the repurchase plan.
The world’s top vegetable oils producer Bunge had also entered partnerships with oil major Chevron (CVX.N) and seeds and chemicals giant Bayer (BAYGn.DE) to pursue soaring demand for renewable fuels feedstocks.
In Ukraine, the world’s top sunflower producer and largest supplier of sunflower oil, a combined Bunge-Viterra would have three oilseed processing plants across the country’s south and east – in Kharkiv, Dnipro and Mykolaiv.
Acquiring Viterra would bring Bunge’s revenue, which was $67.2 billion in 2022, more in line with that of ADM, which registered sales of nearly $102 billion 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 rebuffed.
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The merger is expected to generate about $250 million of annual gross pre-tax operational synergies within three years.
Reporting by Karl Plume and Tom Polansek in Chicago, Anirban Sen in New York, and Arunima Kumar and Mrinalika Roy in Bengaluru
Editing by Caroline Stauffer, Matthew Lewis, Devika Syamnath, Kirsten Donovan
Our Standards: The Thomson Reuters Trust Principles.
Karl Plume
Thomson Reuters
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Chicago-based senior commodities correspondent covering agricultural markets, large agribusinesses and the food supply chain and specializing in global trade, farming technology and climate change issues impacting the industry.
Anirban Sen
Thomson Reuters
Anirban Sen is the Editor in Charge for U.S. M&A at Reuters in New York, where he leads the coverage of the biggest deals. After starting with Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter in several leading business news outlets in India, including The Economic Times and Mint. Anirban rejoined Reuters in 2019 as Editor in Charge, Finance to lead a team of reporters, covering everything from investment banking to venture capital. Anirban holds a history degree from Jadavpur University and a post-graduate diploma in journalism from the Indian Institute of Journalism & New Media.
Contact:+1 (646) 705 9409
Russian and Ukrainian negotiators will meet in Istanbul on Friday for their first peace talks in more than three years as both sides come under pressure from U.S. President Donald Trump to end Europe’s deadliest conflict since World War Two.
A bronze statue of Melania Trump was sawed off at the ankles and stolen this week in the first lady’s native Slovenia, police said.
The statue replaced a wooden one that was erected near her hometown of Sevnica in 2020 at the end of President Donald Trump’s first term after it was targeted in an arson attack.
Both statues were a collaboration between Brad Downey, an artist from Kentucky, and a local craftsman, Ales “Maxi” Zupevc.
The original figure, made of wood and cut from the trunk of a linden tree, portrayed the first lady in a pale blue dress, similar to the one she wore at Trump’s 2016 inauguration.
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A bronze statue of Melania Trump was sawed off at the ankles and stolen this week in the first lady’s native Slovenia, police said. (Associated Press)
The new statue was placed on the same stump as the old one and modeled after the previous design. In July 2020, Downey said the statue would be made “as solid as possible, out of a durable material which cannot be wantonly destroyed,” according to The Guardian.
Slovenian police spokesperson Alenka Drenik Rangus said Friday that police were investigating after the vandalism and theft were reported Tuesday.
Franja Kranjc, a worker at a bakery that sells cakes with the first lady’s name in support of her, told The Associated Press the rustic likeness wasn’t well liked.
Only the ankles remain of a Melania Trump statue that was sawed off and stolen, Slovenian police said. (AP Photo/Relja Dusek)
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“I think no one was really proud at this statue, not even the first lady of the USA,” Kranjc said. “So, I think it’s OK that it’s removed.”
Zupevc said he and Melania Trump were born in the same hospital, which partly inspired him to create the design. He carved the statue with a chainsaw and sanded it with a power tool.
The statue was a rustic likeness of the first lady. (Getty Images)
“I plugged in my angle grinder. … I worked and made mistakes … finished the hair … the eyes and all. Then, I called my brother, who said, ‘Spitting image of our waitress.’ And so it was,” Zupevc said during a documentary film by Downey on the making of the original statue.
A plaque next to the statue says it is “dedicated to the eternal memory of a monument to Melania which stood at this location.”
Born Melanija Knavs in nearby Novo Mesto in 1970, the first lady grew up in Sevnica while Slovenia was part of the Communist-ruled former Yugoslavia. An Alpine nation of 2 million people, Slovenia is now a member of the European Union and NATO.
European Commissioner for Agriculture Christophe Hansen presented his simplification plan for the agricultural sector during a meeting organised by Euronews.
The European Commission unveiled the plan, which aims to simplify the European Union’s agricultural rulebook, on Wednesday in Brussels.
The measures are designed to reduce what the Commission sees as unnecessary administrative burdens in implementing the Common Agricultural Policy (CAP), the EU’s farming subsidy framework.
Hansen believes the proposed strategy should serve all stakeholders. The plan, therefore, aims to reduce the administrative burden for farmers and member states.
“What is felt to be an administrative burden on the farm is not only the CAP (Common Agricultural Policy), but also environmental legislation, health legislation, and often national or regional legislation, so I think that everyone must contribute to reducing this bureaucracy,” Hansen explained.
This simplification plan could potentially save farmers up to €1.58 billion a year and the national authorities €210 million. The package of measures is aimed in particular at organic farming and small farms, which play an essential role in rural areas’ economic activity.
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The plan proposes exemptions from environmental rules, also known as conditionalities. Hansen points out that this package aims not to reform the sector, but to adjust certain rules.
For example, Hansen said, “If grassland remains in place for more than five years, it becomes permanent grassland. This is a devaluation of this farmland because it can no longer be used as arable land. After four years or so, farmers plough to preserve this status.”
“For me, it’s more valuable if the grass stays for seven years rather than five. So this is environmental progress. It’s the applicability (of the rules) that changes,” he added.
Flexibility and financial support
The European Commission also wants to help small farmers obtain financial aid and make their farms more competitive. The institution is considering an offer of up to €50,000.
Hansensuggested digitalising the sector, mentioning, for example, a digital portfolio to facilitate checks.
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“I, as a farm, have my digital wallet and if the water authority needs to know something about my land, they can turn to that wallet,” Hansen explained.
Hansen further reiterated his desire to make the profession attractive again and to help professionals.
“It’s very important that we reduce the stress on our farmers, because at the moment it all depends on the Member State. They have to deal with five, six, seven controls a year, which causes enormous stress for our farmers,” Hansen insisted.
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“That’s why we also want to reduce these controls, and the member states are also obliged to act. We want to reduce the number of checks to just one a year,” he added.
Environmental NGOs believe that the plan threatens the agricultural sector’s green objectives. Hansen, however, rejects this criticism and emphasises that he is responding to the concerns of farmers, who have repeatedly protested against overly restrictive European regulations.
Yet, this simplification plan is only the first step. The European Commission intends to present new measures later this year.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/URUOA32HY5NZTI2SJIUDKW25IY.jpg "Bunge, Viterra will merge to form billion agri-trading powerhouse")
