Crop trader Bunge reportedly set to buy Viterra from Glencore

(Bloomberg) – American agribusiness Bunge Ltd. is set to strike a deal to acquire Glencore Plc-backed Viterra, people familiar with the matter have said, creating a giant capable of competing with the world’s biggest agricultural players.

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Bunge shareholders would hold a significant majority in the deal, which is expected to be announced as soon as Monday or Tuesday, said people familiar with the matter, who asked not to be identified because the information is private. About 70% of the payment would be made in Bunge stock, according to one of the people.

No final decision has been made and the timing or structure of the deal could still change, the sources said. Bloomberg first reported the companies were in merger talks last month.

Representatives for Bunge, Glencore and Viterra declined to comment.

The combination of the two will create a trader big enough to take on the industry elite: Minneapolis-based Cargill Inc. and Chicago-based Archer-Daniels-Midland Co. The deal is the culmination of Bunge CEO Greg Heckman’s transformation of a St. Louis-based crops trader into a cash-rich oilseed champion.

Read more: Bunge-Viterra deal would create $25 billion rival for Cargill

For most of its existence, Bunge was primarily a harvest trader. Its expansion into the Americas saw it become the B in the ABCD quartet of trading houses that dominated agricultural markets, which also includes Louis-Dreyfus Co.

After a misguided bet on soybean prices led to a surprise quarterly loss in 2018, Heckman took over as Bunge’s helm, cutting costs, selling underperforming businesses and focusing on risk management. The company also benefited from market turbulence and volatility caused by the war in Ukraine, while a boom in renewable diesel helped support earnings.

The merger will offer Glencore CEO Gary Nagle a way to unlock value from the company’s 49.99% stake in Viterra, which has limited synergies with its broader operations in metals, mining and trade.

Glencore has flirted with the idea of ​​a deal with Bunge for years. In 2017, he approached Bunge about a friendly takeover, but was publicly rebuffed.

The deal also has the backing of two of Canada’s largest pension funds, which hold a combined 49.98% stake in Viterra, a person familiar with the matter told Bloomberg last month.

–With help from Dylan Griffiths, Thomas Biesheuvel and Matthew Monks.

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