Bunge to buy Glencore-backed Viterra in $8.2bn agribusiness deal

The global crop merchant Bunge is to buy competitor Viterra in an $8.2bn cash and shares deal, creating an agricultural behemoth to rival the largest trading houses that move grains, oilseeds and pulses from farm to consumers.

The combined group will compete with industry leaders Cargill and Archer Daniels Midland, strengthening Bunge’s presence in some of the world’s key food supplying regions such as Canada and the US.

Shareholders in Glencore-backed Viterra will receive about $6.2bn in Bunge shares and $2bn in cash, and will control one-third of the company’s stock post-transaction.

The consolidation comes after a year of bumper profits for Bunge and Viterra, as the war in Ukraine led to grain price spikes and market volatility across commodities. 

Bunge, founded more than 200 years ago, has long been known as the “B” in the so-called “ABCD” of global grain trading companies that link farmers with food importers. The others are ADM and Cargill, both headquartered in the US, and Europe-based Louis Dreyfus.

Bunge, which is listed in New York and based in Missouri, reported $1.6bn in net profit last year, while privately held Viterra earned $1bn.

Bunge-Viterra’s combined revenues totalled $121bn in 2022, which would put the merged group in league with Cargill, the world’s largest agricultural commodities company with revenues of $165bn in its fiscal year ended May 2022.

Goldman Sachs analysts wrote in a client note that the combination would “create one of, if not the, largest global grain handlers and further increase the size of the world’s largest oilseed processor”.

For Viterra shareholders — Glencore, Canada Pension Plan Investment Board (CPPIB), and British Columbia Investment Management Corp — the deal represents a chance to cash in at a time when commodities trading houses are enjoying big profits.

Shares in Glencore, the Swiss mining and trading giant, climbed 5 per cent in London on the news. Bunge shares rose 0.2 per cent in New York. 

Bunge chief executive Greg Heckman said: “Our highly complementary asset footprints will create a network that connects the world’s largest production regions to areas of fastest-growing consumption.”

Viterra has its roots in grain-handling co-operatives in Canada’s Saskatchewan province and extensive operations across the US, which it gained through its 2022 acquisition of Gavilon. Bunge will gain more than 270 storage and handling facilities, over 30 processing sites and a fleet of more than 200 ships through the deal to bolster its presence in the fertile regions of Canada, the US, Brazil, Argentina and Australia.

Viterra chief executive David Mattiske will become chief operating officer in the joint company. “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,” he said in a statement.

The deal marks an end to Glencore’s agricultural trading arm, which was previously known as Glencore Agriculture. Glencore acquired Viterra for $6.1bn a decade ago. In 2016, Glencore sold down its stake in Viterra to just under 50 per cent, with the remainder held by CPPIB and British Columbia Investment Management Corp.

The sale will bolster Glencore’s financial firepower as it pursues a takeover of Canadian steelmaking coal, copper and zinc producer Teck Resources. 

Glencore had previously held discussions with Bunge about a possible Viterra merger in 2017, but was rebuffed. 

The companies said the deal would generate about $250mn of pre-tax cost savings annually within three years of its completion, which is expected in mid-2024.