Bunge and Viterra Announce Mega-Merger, Forging a $34 Billion Agricultural Trading Giant

05 Jul 2023

Bunge, a merchant specializing in U.S. grains, and Viterra, supported by Glencore, have revealed plans to merge and establish a colossal agricultural trading entity valued at approximately $34 billion, considering the debt. The announcement was made on 13th June 2023, and the deal is expected to undergo a thorough regulatory examination due to its significance. 

Here’s the Complete Story

This historic deal marks a remarkable milestone in the global agriculture industry due to its unprecedented magnitude. It follows Bunge's remarkable performance in 2022, where the company achieved record-breaking adjusted profits. Bunge's success was attributed to the limited global grain supplies caused by the conflict with Ukraine. As a result of this news, Bunge's shares experienced a surge of over 2%.

The valuation of both Bunge and Viterra stands at approximately $17 billion each. However, Bunge shareholders will hold a majority stake of around 70% in the newly formed entity since a significant portion of the deal will be financed by cash payments from Bunge.

By merging, the combined company will substantially enhance its global presence, positioning it in closer competition with major industry players such as Archer-Daniels-Midland (ADM.N) and Cargill (CARG.UL). 

Future Expectations of This Deal

As part of the agreement, Viterra shareholders will receive approximately 65.6 million shares of Bunge stock, with an estimated worth of around $6.2 billion, along with a cash sum of approximately $2 billion. 

Additionally, Bunge will take on Viterra's debt totaling $9.8 billion, as stated in a joint announcement. Following the anticipated completion of the deal in mid-2024, Viterra shareholders will possess a 30% ownership stake in the merged company.

Being the largest oilseed processor globally, Bunge's existing status, along with Viterra's crushing operations, is expected to attract regulatory scrutiny in various countries, including Canada and Argentina, according to analysts' assessments. 

The antitrust regulator in Canada has confirmed that it will conduct a review of the proposed merger, as stated by a spokesperson representing the regulator. However, as of now, Argentina's competition bureau has not received an official notification regarding the merger, according to a government source. 

According to the Consumer Federation of America, the proposed merger would result in decreased competition for farmers' crops and consolidation of the oilseed processing industry. This consolidation would impact the production of plant-based foods and biofuels, coinciding with the broader efforts of the Biden administration to foster competition in the economy.

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