Two of the world’s largest agricultural produce traders are seeking a merger: Bunge Limited is set to acquire Viterra Limited. The process is not simple, especially since it can affect grain purchase prices in more than one country, primarily Canada. The unprecedented deal is expected to close by the middle of this year. But he will really be approved – for now there are serious doubts.
A merger of merchant giants is planned
The groups announced their intention to combine businesses as early as last summer, and the stated purpose of the capital merger (amounting to $34 billion) is to create a leading diversified global agribusiness solutions company.
“Together, the complementary organizations will benefit from more diverse capabilities, greater operational flexibility in the oilseed and grain supply chains and processing, and increased resources,” the companies said in a joint statement.
The companies expect to achieve about 250 million in three years of joint activity. USD of pre-tax annualized gross operating synergies.
Under the proposed deal, Viterra shareholders would acquire a stake in Bunge worth about $6.2 billion. USD, and about another 2 billion USD in cash. Bunge would take over 9.8 billion USD Viterra debt.
About Viterra. The group, born in Canada and now operating in 37 countries around the world, manages more than 265 storage and handling facilities, 30 processing and refining companies, 20 port terminals, 200 ocean-going vessels, and provides work for more than 16 thousand people. workers. Using its own infrastructure, it buys, processes and supplies grains, oilseeds, legumes, rice, sugar, cotton, and feed components to consumers around the world.
About Bunge. A global agribusiness and food company established in Switzerland. Headquartered in St. Louis, Missouri, United States. A significant exporter of soybeans, grain and fertilizer trader, producer and supplier of vegetable oils and fats in the international market. According to the group itself, it manages about 300 facilities located in more than 40 countries of the world and has almost 23 thousand. workers.
Developments were prepared in advance
Bunge cut back or sold underperforming operations, including milling South American sugar and Mexican wheat, and invested in its core edible oil business. in 2022 the company reported record profits despite a string of quarterly losses before that. In that year, it was the largest exporter of corn and soybeans from Brazil, which is perhaps the world’s leading producer of soybeans.
The world’s largest vegetable oil producer has partnered with oil company Chevron and seeds and chemicals giant Bayer to meet the rapidly growing demand for renewable fuel feedstock.
Viterra 2022 also expanded its grain trade with the acquisition of Gavilon, becoming the world’s third-largest corn and seventh-largest exporter of soybeans.
If the merger of Bunge’s and Viterra’s businesses goes as planned, the former group would strengthen its grain export and oilseed processing businesses. The deal would also increase its physical grain storage and handling capacity in major wheat exporter Australia, where the company currently only operates 2 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 6 bulk grain export terminals. The joint company would have 3 sunflower oil factories in Ukraine in the south and east of the country – in Kharkiv, Dnipro and Mykolaiv.
Concern: the competition of buyers in the markets would decrease
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The Canadian Competition Bureau is in no rush to approve the deal. The institution announced this week that it sees major problems, as the competitive environment in the country may suffer greatly. In the grain buying, processing and export markets, these two companies are the most important players in Canada. The deal could hurt competition in grain markets in western Canada, as well as canola oil sales in eastern Canada. This is bad news for farmers: the opportunities to sell the produce at a better price are decreasing.
In addition, the competition authority suspects that Bunge’s game is not entirely fair, the group may have influenced the economic behavior of Viterra’s main competitor in the Canadian market, G3 Global Holdings (G3). Because Bunge is a minority shareholder of G3 and therefore had access to confidential information.
According to the competition authority’s announcement, the public interest review process is ongoing and the final decision on the proposed transaction will be made on the advice of the Minister for Transport.
“We are pleased that the regulatory process is moving forward and we are confident that the transaction will bring significant benefits to Canada.” This will include stronger supply chains in uncertain global markets, maintaining Canada’s leadership in agriculture and food by increasing investment capacity and placing thousands of Canadians in good-paying jobs,” Bunge said in a statement in response to the Canadian Competition Bureau’s report, while not losing optimism that the deal will be completed by mid-year. and Viterra.
But not only the Canadian Competition Bureau, but a total of 13 authorities have to deliver the verdict. The agreement has not yet been confirmed by any of them.
Speaking about the Canadian market, experts do not rule out the possibility that Viterra may have to sell some of the facilities it operates here.
ŪP portal information
Associative 123rf photo.
