Global crop trader Bunge will acquire rival Viterra in an $8.2 billion cash and stock deal, creating an agricultural giant that rivals the largest trading houses that move grains, oilseeds and pulses from farms to consumers.
The combined group will compete with industry leaders Cargill and Archer Daniels Midland, strengthening Bunge’s presence in key food supply regions of the world, including Canada and the United States.
Shareholders of Glencore-backed Viterra will get about $6.2 billion in Bunge stock and $2 billion in cash, and will control a third of the company’s stock after the deal.
Bunge and Viterra are consolidating after a year of fat profits as the war in Ukraine sent grain prices soaring and commodity markets volatile.
Founded more than 200 years ago, Bunge has long been known as the “B” in what’s known as “ABCD,” the global grain trading company that connects farmers to food importers. The others are US-based ADM and Cargill, and Europe-based Louis Dreyfus.
Bunge, which is New York-listed and based in Missouri, posted a net profit of $1.6 billion last year, compared with $1 billion for privately held Viterra.
Bunge-Viterra’s combined revenue would total $121 billion in 2022, which would align the combined group with Cargill, the world’s largest agricultural products company, which had $165 billion in revenue for the fiscal year ending May 2022.
Goldman Sachs analysts wrote in a client note that the merger would “create one of, if not the largest grain processors in the world and further expand the size of the world’s largest oilseed processors.”
For Viterra’s shareholders — Glencore, the Canada Pension Plan Investment Board (CPPIB) and British Columbia Investment Management — the deal represents an opportunity to profit at a time when the commodity trading house enjoys huge profits .
Shares in Swiss mining and trading giant Glencore rose 5 percent in London on the news. Bunge shares rose 0.2 percent in New York.
Bunge CEO Greg Heckman said: “Our highly complementary asset footprints will create a network that connects the world’s largest production regions with the fastest growing consumption regions.”
Viterra originated as a grain handling cooperative in Saskatchewan, Canada, and has extensive operations across the United States, acquired through the 2022 acquisition of Gavilon. Through the transaction, Bunge will gain more than 270 storage and handling facilities, more than 30 processing sites and a fleet of more than 200 vessels to strengthen its presence in the fertile regions of Canada, the United States, Brazil, Argentina and Australia Influence.
Viterra CEO David Mattiske will become the joint venture’s chief operating officer. “By combining our highly complementary production, processing and distribution networks, we are better able to meet the growing demand for the food, feed and fuel products we offer,” he said in a statement.
The deal marks the end of Glencore’s agricultural trading unit, previously known as Glencore Agriculture. Glencore bought Viterra for $6.1 billion a decade ago. Glencore sold its stake in Viterra to just under 50 percent in 2016, with CPPIB and British Columbia Investment Management Corp. holding the remainder.
The sale will boost Glencore’s financial firepower as it seeks to buy Canadian steelmaking coal, copper and zinc producer Teck Resources.
Glencore had previously held discussions with Bunge about a possible Viterra merger in 2017, but it was rejected.
The deal is expected to generate about $250 million in annual pre-tax cost savings over three years after closing in mid-2024, the companies said.