Bunge and Viterra agree mega-merger to form global agribusiness powerhouse

13 Jun 2023 --- Bunge has entered into a definitive agreement with Viterra, together with certain affiliates of Glencore PLC, Canada Pension Plan Investment Board and British Columbia Investment Management Corporation, to merge with Viterra in a stock and cash transaction. The combined company would be valued at a reported US$34 billion including debt, while the proposed merger is expected to attract close regulatory scrutiny.

The merger of Bunge and Viterra will create a “global agribusiness powerhouse,” which is poised to meet the demands of increasingly complex markets and better serve farmers and end customers.

The deal would form a mega agriculture trader slated to accelerate investments in sustainable solutions to this century’s most pressing food challenges. The merger is expected to close in mid-2024, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by Bunge shareholders.

“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,” says Bunge CEO Greg Heckman.

“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 benefiting farmers and end-customers.”

The companies stress the combination will lead to more diversified capabilities (Credit: Viterra).In a statement, the world’s largest oilseed processor Bunge says the businesses have an “increased diversification” across assets, supply chains, geographies and crops.

Oilseed and grain supply
The companies stress the combination will lead to more diversified capabilities and 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.

The combined company will have an enhanced global network, increased diversification across geographies and seasonal cycles and “crops will increase optionality in managing risk and increase resiliency.”

“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 we believe this combination will offer great opportunities for employees of both companies,” explains Heckman.

“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 CEO, adds that as two key agriculture businesses, Viterra and Bunge will play a leading role in the future of the agriculture industry, developing fully traceable, sustainable supply chains and moving toward carbon-neutral operations while creating a strong growth platform for the combined business.

“This further enables us to offer innovative solutions and open additional pathways for our customers. We will create value for stakeholders across our network as we build on our shared purpose to connect producers and consumers around the world. We look forward to joining with the Bunge team as we enter this next chapter,” he says.

Shareholders and finances
Both companies also flag their “compelling financial profiles,” with strong investment-grade balance sheets that support shareholder returns.

Under the terms of the agreement, which was unanimously approved by the Boards of Directors of both companies, Viterra shareholders would receive approximately 65.6 million shares of Bunge stock, with an aggregate value of about US$6.2 billion, and about US$2 billion in cash, representing a consideration mix of approximately 75% Bunge stock and 25% cash.

As part of the transaction, Bunge will assume US$9.8 billion of Viterra debt, which is associated with approximately US$9 billion of highly liquid, Readily Marketable Inventories.

Bunge also plans to repurchase US$2 billion of Bunge’s stock to enhance accretion to adjusted earnings per share. Bunge intends to commence repurchases “as soon as practically possible, subject to market conditions and SEC rules on trading restrictions.”

The company also 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 the completion of the repurchase plan.

What to expect from the deal?Viterra and Bunge will play a leading role in the future of the agriculture industry.
The combined company will be positioned to connect the world’s largest production regions to areas with the fastest-growing consumption.

The combination augments Bunge’s existing footprint with significant grain and softseed handling capacity while expanding origination capabilities in key regions and crops where Bunge is underrepresented. The combined company will be diversified across the key export origins, as well as major crush destinations.

Increased direct origination reach will transform the combined company’s ability to promote sustainable practices in the global food supply, including origination transparency, low carbon product streams, full end-to-end traceability across major crops and origins, and the acceleration of regenerative agriculture to reduce greenhouse gas emissions.

Combining Bunge and Viterra’s complementary global value chains and origination capabilities will offer farmers greater market access and differentiated, value-added solutions in all key origins. Food, feed & fuel customers will benefit from a broader product portfolio and expanded global supply options.

Bunge and Viterra will have a greater capacity to invest in global initiatives that enhance and connect value chains with increased optionality to provide solutions to farmers and end-customers.

Leadership team
Once the transaction has been closed, the combined company will be led by Heckman and John Neppl, Bunge’s chief financial officer. Viterra’s Mattiske will join the Bunge executive leadership team as co-chief operating officer.

The combined company will operate as Bunge, NYSE: BG, with operational headquarters in St. Louis, Missouri, US Viterra’s current headquarters in Rotterdam, the Netherlands, will be an important commercial location in the future of the combined company.

The Bunge Board of Directors is expected to comprise eight Bunge-nominated representatives and four representatives nominated by Viterra shareholders.

The merger is expected to close in mid-2024, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by Bunge shareholders.

By Gaynor Selby

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