USA- Bunge Limited has finally entered into a definitive agreement with Viterra Limited in a stock and cash transaction, creating a merger that will create an formidable global agribusiness company, well-positioned to meet the demands of increasingly complex markets and better serve farmers and end-customers.
The merger is likely to close in mid-2024, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by Bunge shareholders.
The combined company will operate as Bunge, NYSE: BG, with operational headquarters in St. Louis, Missouri.
On the other hand, Viterra’s current headquarters in Rotterdam will be a significant commercial location in the future of the merged company.
Glencore, Viterra’s majority shareholder, had toyed with the idea of a partnership with Bunge on and off for years, with the Swiss commodities trader approaching Bunge about a friendly takeover in 2017 without success.
This merger is therefore a culmination of such efforts and is a strategic decision to increase the global footprint of both commodity trading giants.
With an enhanced global network, 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 organizations will benefit from more diversified capabilities, greater operational flexibility across oilseed and grain supply chains and processing, and combined employee talent.
“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,” David Mattiske, Viterra’s Chief Executive Officer commented.
Under the terms of the agreement, 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 US$6.2 billion, and around US$2.0 billion in cash, representing a consideration mix of about 75% Bunge stock and 25% cash.
Additionally, Bunge will assume US$9.8 billion of Viterra debt, associated with approximately US$9.0 billion of highly liquid Readily Marketable Inventories.
In addition, Bunge plans to repurchase US$2.0 billion of Bunge’s stock (the “Repurchase Plan”) to enhance accretion to adjusted EPS as soon as practically possible, subject to market conditions and SEC rules on trading restrictions, ideally within the next 18 months post-transaction close.
The combination augments Bunge’s footprint with significant grain and soft seed handling capacity while expanding origination capabilities in key regions and crops where Bunge remains underrepresented.
“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,” Greg Heckman, Bunge’s Chief Executive Officer remarked.
Enhanced network benefits will foster efficiencies, connectivity, and capabilities across value chains while the combined company’s shared commitment to excellence will foster a “best practice sharing” mindset, with a greater capacity to invest in teams and technology.
“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,” Heckman added.
Following the close of the transaction, the combined company will be led by Greg Heckman, Bunge’s Chief Executive Officer, and John Neppl, Bunge’s Chief Financial Officer.
Viterra Chief Executive Officer David Mattiske will join the Bunge Executive Leadership Team in the role of Co-Chief Operating Officer.
In addition, the Bunge Board of Directors is expected to be comprised of eight Bunge-nominated representatives and four representatives nominated by Viterra shareholders after the completion of the transaction.
“We look forward to joining the Bunge team as we enter this next chapter, creating new opportunities for our people. The combined talent and experience of our workforce will allow us to offer a truly world-leading service across everything we do,” David Mattiske, Viterra’s Chief Executive Officer added.