St. Louis, Missouri-based grain trader and oil seed processor Bunge Limited announced June 13 that it has entered into a definitive agreement with Viterra Limited, together with certain affiliates of Glencore PLC, Canada Pension Plan Investment Board and British Columbia Investment Management Corporation, to merge with Viterra in a stock and cash transaction.
Merger rumors between the two companies were reported in March by Bloomberg.
The merger is expected to close in mid-2024, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by Bunge shareholders. The merger will form a new ag trading giant worth more than $34 billion, comparable in size to global rivals Cargill and ADM. The deal is subject to antitrust approval. Bunge is already the world’s largest oilseed processor. Last October, Viterra expanded by buying the grain-distribution business of Omaha-based Gavilon for $1.125 billion.
Following the transaction’s close, the combined company will be led by Greg Heckman, Bunge’s CEO, and John Neppl, Bunge’s Chief Financial Officer. Viterra CEO David Mattiske will join the Bunge executive leadership team in the role of co-chief operating officer. The combined company will operate as Bunge, NYSE: BG, with operational headquarters in St. Louis, Missouri. Viterra’s current headquarters in Rotterdam will be an important commercial location in the future of the combined company.
Heckman said, “The combination of Bunge and Viterra significantly accelerates Bunge’s strategy, building on our fundamental purpose to connect farmers to consumers to deliver essential food, feed and fuel to the world. Our highly complementary asset footprints will create a network that connects the world’s largest production regions to areas of fastest growing consumption, enhancing the geographical balance and adaptability of our global value chains and benefitting farmers and end-customers. … Together, we will be positioned to increase our operational efficiency while innovating to address the pressing needs of food security, efficiency for end-customers, market access for farmers, and sustainable food, feed and renewable fuel production.”
Mattiske said, “Viterra and Bunge are two leading agriculture businesses. In combining our highly complementary origination, processing and distribution networks, we are better positioned to meet the increasing demand for the food, feed and fuel products we offer. Together, we will play a leading role in the future of the agriculture industry, developing fully traceable, sustainable supply chains and moving towards carbon-neutral operations, while creating a strong growth platform for our combined business. … We look forward to joining with the Bunge team as we enter this next chapter, creating new opportunities for our people.”
Under the agreement’s terms, which were unanimously approved by the boards of directors of both companies, Viterra shareholders would receive about 65.6 million shares of Bunge stock, with an aggregate value of about $6.2 billion, and approximately $2 billion in cash, representing a mix of about 75% Bunge stock and 25% cash.
As part of the transaction, Bunge will assume $9.8 billion of Viterra debt, which is associated with approximately $9.0 billion of highly-liquid Readily Marketable Inventories. In addition, Bunge plans to repurchase $2 billion of Bunge’s stock. Viterra shareholders would own 30% of the combined company on a fully diluted basis upon the close of the transaction, and approximately 33% after completion of the repurchase plans. The companies claim the merger will “transform the combined company’s ability to promote sustainable practices in global food supply, including origination transparency, low carbon product streams, full end-to-end traceability across major crops and origins, and the acceleration of regenerative agriculture to reduce greenhouse gas emissions. … Food, feed & fuel customers will benefit from a broader product portfolio and expanded global supply options.”
The combination is expected to generate approximately $250 million of annual gross pre-tax “operational synergies” within three years, as well as “significant incremental network synergies,” improved logistics optimization and trading optionality from a larger and broader network.
David Murray can be reached at [email protected].
