EU approves Bunge and Viterra multi-billion dollar merger after companies address competition concerns

08 Aug 2024 --- The European Commission has approved US giant Bunge’s acquisition of Dutch grain handling business Viterra. The deal was approved after “positive feedback” during the market test indicated the transaction “would no longer raise competition concerns.” 

The approval is conditional upon full compliance with the companies’ commitments. 

The businesses announced plans to merge last year to create a “global agribusiness powerhouse” to meet the demands of increasingly complex markets and better serve farmers and end customers. 

Merger concerns 
The Commission says its investigation showed that the acquisition would have reduced competition in the markets for oilseeds and related products, including oilseed meals for animal consumption, crude oilseed oils and refined oilseed oils for human consumption or biodiesel production. 

It explains the deal would have negatively impacted competition in Central Europe, where both parties are active across the whole supply chain. To prevent these concerns, the parties offered to divest the entirety of Viterra’s oilseed businesses in Hungary and Poland and several logistical assets linked to these operations.

The Commission believes the companies have now fully addressed these competition concerns “by removing the horizontal overlaps and vertical links between the parties’ oilseed businesses in the concerned territories.”

“Preventing market concentration in agricultural supply chains is crucial for both farmers and consumers. We had concerns that the transaction could affect the supply chains of rapeseed and sunflower seed in Central Europe, with potential ramifications across the food, feed, and biofuel industries,” says Margrethe Vestager, executive VP in charge of competition policy.

Bunge and Viterra have fully addressed the European Commission's competition concerns.

“The divestiture of Viterra’s entire oilseeds business in Hungary and Poland will preserve competition in these markets.”

A spokesperson for Bunge tells Food Ingredients First: "We are pleased with the European Commission’s decision for conditional clearance of the proposed merger of Bunge and Viterra. We are confident that the combination of Bunge and Viterra will contribute to improving the global agricultural supply chain and increase market access and opportunities for farmers and end customers."

Significant acceleration 
Under the original terms of the agreement, 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.

At the time of the announcement, Bunge CEO Greg Heckman said that the combination of Bunge and Viterra would “significantly accelerate Bunge’s strategy, building on our fundamental purpose to connect farmers to consumers to deliver essential food, feed and fuel to the world.” 

He added: “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 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 essential commercial location in the combined company's future.

By Sade Laja