USA – Glencore-owned global grain trader Viterra is in talks concerning a possible merger with U.S. rival Bunge Ltd- a strategic move that will potentially form one of the most formidable international grain merchants, Reuters reported, quoting people familiar with the matter.
These talks come a while after Glencore had publicly said it was reviewing options for its interest in Viterra, looking to unlock more value.
According to these reliable but anonymous sources, it is still uncertain that the ongoing talks will lead to this speculated merger, but it is a highly likely outcome.
According to Reuters, any resultant deal would undergo scrutiny by regulators as trade in staples such as wheat, corn, and soybeans is already concentrated among Bunge and three other prominent players, raising global concerns about food security.
The other three agricultural giants include American Archer Daniels Midland, Cargill, and French Louis-Dreyfus Group.
The agribusinesses make money buying, selling, storing, and processing crops, often capitalizing on supply disruptions caused by crises like drought or war.
This merger with Viterra would strengthen the place of Bunge in commodities elevation significantly, with access to export terminals in the United States, one of the largest grain producers and suppliers.
It would also propel Bunge, with 2022 revenues of US$67.2 billion, closer to its nearest publicly traded agribusiness rival Archer-Daniels-Midland Co, which registered sales of nearly US$102 billion last year.
According to data from shipping agent Cargonave, last year, Bunge was the largest corn and soy exporter from Brazil- the world’s top source of staple crops for making animal feed and biofuels.
This data also reveals that Viterra was the third largest corn exporter and No. 7 soybean shipper.
Viterra bought U.S.-based Gavilon from Japan’s Marubeni last year for US$1.1 billion, giving it significantly more physical grain handling assets in the U.S. and making it the third-largest exporter of soybeans in Brazil, where Bunge already has a strong presence.
According to the Reuters report, this is not the first time these two businesses have considered a merger.
Viterra, then known as Glencore Agriculture, approached Bunge, making an informal approach to discuss “a possible consensual business combination,” which Bunge refused.