Bunge and Viterra agri-ingredient firms set to merge in global multi-billion deal
Global ingredients group Bunge has confirmed a major merger agreement with fellow agricultural business Viterra to forge a combined group that has been valued by industry insiders at a total of $34 billion, writes Neill Barston.
As the companies noted, the move will enable both firms to meet the demands of increasingly complex markets and better serve farmers and end customers alike with industrial solutions across a number of segments.
Consequently, the combined company’s increased diversification across geographies, seasonal cycles and crops will increase optionality in managing risk and increase resiliency. Together, the highly complementary organisations will benefit from more diversified capabilities, greater operational flexibility across oilseed and grain supply chains and processing, greater resources and combined employee talent to innovate and deliver for customers in every environment, creating value for all stakeholders.
The Bunge group includes Netherlands-based Bunge Loders Croklaan, which has served the food sector – including a broad array of applications for the confectionery, snacks and bakery industries.
Under the terms of the agreement, which was unanimously approved by the Boards of Directors of Bunge and Viterra, Viterra shareholders would receive approximately 65.6 million shares of Bunge stock, with an aggregate value of approximately $6.2 billion, and approximately $2.0 billion in cash, representing a consideration mix of approximately 75% Bunge stock and 25% cash. As part of the transaction, Bunge will assume $9.8 billion of Viterra debt, which is associated with approximately $9.0 billion of highly-liquid Readily Marketable Inventories.
In addition, Bunge plans to repurchase $2.0 billion of Bunge’s stock (the “Repurchase Plan”) to enhance accretion to adjusted EPS. Bunge intends to commence repurchases as soon as practically possible, subject to market conditions and SEC rules on trading restrictions, and expects to complete the Repurchase Plan no later than 18 months post transaction close. Viterra shareholders would own 30% of the combined company on a fully diluted basis upon the close of the transaction, and approximately 33% after completion of the Repurchase Plan.
Greg Heckman, Bunge’s Chief Executive Officer said, “The combination of Bunge and Viterra significantly accelerates Bunge’s strategy, building on our fundamental purpose to connect farmers to consumers to deliver essential food, feed and fuel to the world. Our highly complementary asset footprints will create a network that connects the world’s largest production regions to areas of fastest growing consumption, enhancing the geographical balance and adaptability of our global value chains and benefitting farmers and end-customers. With a diversified global mix of earnings across processing, handling and merchandising, and value-added products, we will increase the resiliency of our cash flow generation. We have great respect for the team at Viterra, which shares our commitment to excellence, and believe this combination will offer great opportunities for employees of both companies. Together, we will be positioned to increase our operational efficiency while innovating to address the pressing needs of food security, efficiency for end-customers, market access for farmers, and sustainable food, feed and renewable fuel production.”
David Mattiske, Viterra’s Chief Executive Officer said, “Viterra and Bunge are two leading agriculture businesses. In combining our highly complementary origination, processing and distribution networks, we are better positioned to meet the increasing demand for the food, feed and fuel products we offer. Together, we will play a leading role in the future of the agriculture industry, developing fully traceable, sustainable supply chains and moving towards carbon-neutral operations, while creating a strong growth platform for our combined business.”