The Merger
Reuters’ Karl Plume and Anirban Sen reported in June 2023 that the merger “brings the combined company closer in global scale to leading rivals Archer-Daniels-Midland and Cargill, valuing Bunge and Viterra at about $17 billion each. Bunge shareholders, however, will own about 70% of the company, because Bunge will pay for a significant chunk of the deal with cash.”
“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,” Plume and Sen reported. “Bunge will also assume $9.8 billion of Viterra’s debt, according to a joint statement. Viterra shareholders will own 30% of the combined company following the deal’s expected close in mid-2024.”
“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,” Plume and Sen reported. “Viterra was the third-largest corn exporter and No. 7 soybean shipper. …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.”
“Sustained annual earnings of $4 billion are ‘a very reasonable target’ for the company after the merger, John Neppl, Bunge’s chief financial officer, said in an interview,” Plume and Sen reported.
Other Canadian Concerns
Progressive Farmer’s Chris Clayton reported that “one problem the Canadian government cited in the merger is that Bunge already holds a 25% minority interest in another Canadian grain company, G3, which has ‘significant grain elevator and terminal elevator assets in Canada.’ The Competition Commission review cited, ‘Bunge is likely able to materially influence G3 through its minority interest, and the ability of the combined Bunge-Viterra entity to access G3’s confidential information and influence G3’s economic behavior will pose competition concerns following the proposed transaction,’ according to the government’s report.”
Bunge and Viterra Response
“In a joint statement, Bunge and Viterra said the concerns were ‘misplaced’ and they still expect to receive the required regulatory approval and complete the sale in mid-2024,” Clayton reported. “…U.S. regulators have not weighed in on the sale.”
“The non-binding (Competition Bureau) report was sent to Canada’s transport ministry, which has until June 2 to review the deal. The minister’s office could not immediately comment,” Ljunggren and Nickel reported. “The Canadian government will take a final decision.”
Source : illinois.edu