Corbion in talks to acquire Bunge’s stake in SB Renewable Oils JV

Bunge disclosed these talks as part of its strategic update alongside the release of its year-end 2017 financial results, which shows some pressure on the 200-year-old company which was recently approached by Archer Daniels Midland (ADM) as part of a takeover bid.

Corbion and Bunge are 50.1 percent/49.9percent partners in SB Renewable Oils, a joint venture that operates a facility in Brazil, specializing in the production of algae ingredients, such as Omega 3 rich oil, for aquaculture and animal feed.

While the discussions are constructive, it is uncertain if and when they will lead to an agreement.

Speaking in the February edition of FoodIngredientsFirst's sister publication The World of Food Ingredients, senior vice president food at Corbion Ruud Peerbooms talks about other acquisitions and innovations that are driving growth such as the potential market for meat alternatives and the recent TerraVia acquisition.

“If you want to be there that means that you basically need to be active in alternative proteins, which is what they can deliver. So besides the business we have today in TerraVia, which is in DHA enrichment for feed, part of their portfolio delivers all kinds of alternative protein sources are available,” he says.

“Today their DHA business is fully-scaled, through their joint venture with Bunge, with DHA-rich algae that is mainly used in the aquaculture space. All of the rest is still in development.”

“Algae allows you to derive oils and proteins and both can be modified. In oils, you could think of self-emulsifying oils, which could reduce the need for emulsifiers. In proteins, it could be the direction of nutritional value or the functional side, which could also be modified for texture, mouthfeel or other benefits.”

Financial highlights
Meanwhile, Bunge earnings for the fourth quarter were impacted by lower grain margins and tax law changes which led to a loss of US$60 million compared with a profit of US$271 million a year earlier.

For the year ended Dec. 31, 2017, Bunge reported earnings of US$160 million, down from US$745 million in the previous year. The company reports Q4 GAAP EPS of $(0.48) reflecting charges primarily related to restructuring and tax reform; $0.67 on an adjusted basis.

Agribusiness was impacted by weak margins, while Sugar & Bioenergy was impacted by adverse weather, however, Edible Oils finished the year strong with near record results.

Other highlights include the company’s Global Competitiveness Program exceeding expectations in 2017 and expectations that the Loders Croklaan acquisition is to close in Q1, while the overall 2018 outlook includes year-over-year improvement in all segments.

“While industry headwinds persisted through the end of the year, we made good progress in 2017 towards our strategic objectives by taking proactive steps to improve our cost structure and create a more balanced business,” said Soren Schroder, Bunge's CEO.

“Fourth quarter oilseed margins did not recover as quickly as expected, and sugarcane milling results were negatively impacted by a sustained period of rain late in the quarter.”

 
“Food & Ingredients finished the year on a strong note with Edible Oils closing out a near-record year. Looking ahead, we are seeing positive signs that soy processing conditions are improving, supporting our expectation that all segments will show year-over-year earnings growth in 2018. We expect a soft first quarter with improving conditions throughout the remainder of the year.”

“Our Global Competitiveness Program is off to a strong start, putting us on a good trajectory to achieve our US$250 million target by the end of 2019. We also delivered US$110 million of industrial cost savings in 2017, exceeding our target by US$10 million. In addition, we continue to work toward the separation of our sugarcane milling business and are in the process of exiting from our global sugar trading activities and our renewable oils joint venture.”

“We expect our acquisition of Loders Croklaan to close during the first quarter. Loders will greatly advance our strategy to expand downstream into higher margin products closely tied to our global oils and crushing footprint. This will accelerate our move to become the leading global B2B edible oils company.”