ST. LOUIS — Bunge Ltd., a leading U.S. grains merchant and the world’s largest soybean processor, will merge with Viterra, a rival company owned by Swiss multinational Glencore Plc, to form a more than $25-billion agricultural trading giant.
Bunge and Viterra’s boards of directors unanimously approved a stock-and-cash transaction agreement on June 13.
In Canada, Bunge operates five facilities in the prairie provinces and a Hamilton processing plant. Viterra runs a Montreal terminal and a Quebec soybean and canola crushing facility, as well as several facilities on the prairies. The companies face some overlap in their canola crushing businesses, which may require the sale of certain assets to receive regulatory approval.
Analysts suggest that this mega deal will not only expand the businesses of the combined entity in the United States, Brazil, and Australia but also raise concerns regarding competition in Canada and Argentina due to overlapping oilseed processing assets.
The agreement will see Viterra shareholders get approximately 65.6 million shares of Bunge stock worth about $6.2 billion, plus $2 billion in cash. Bunge will assume $9.8 billion of Viterra debt and plans to repurchase $2 billion of Bunge stock no later than 18 months after the transaction closes.
The new company will strengthen its presence in North America and Europe, positioning itself closer to leading rivals such as Archer-Daniels-Midland Co. and Cargill Inc. Seth Goldstein, an equity analyst with Morningstar, suggests that certain divestitures may be required in South America to ensure competition remains intact.