News in brief: Bunge and Viterra have announced a merger that will lead to creating a $34 billion company. The new entity could become a number one agricultural trading player, gaining ground in various agricultural exporting regions and generating over $110 billion in revenue.
Two agricultural trading giants, Bunge and Viterra have announced a merger that will see them consolidate into an industry powerhouse worth $34 billion.
A deal of this kind is likely to attract regulatory scrutiny that will delay it for months as we saw in the 2022 case of Microsoft’s Xbox and Activision Blizzard.
According to a Reuters report, the deal brings the new company closer to existing giants like Archer-Daniels-Midland (ADM), which is worth $39.85 billion and Cargill, which has consistently generated revenues of over $100 billion since 2010.
While the companies are both valued at $17 billion each, Bunge will own a bulk of the new company as it is buying most of Viterra, about $9.8 billion of its debt. Viterra shareholders will receive 65.6 million Bunge stocks worth $6.2 billion and $2 billion cash.
Bunge, Viterra merger to create agricultural trading powerhouse
Bunge, which is an American company, is the world’s largest oilseed processor and was the largest corn and soybean exporter from Brazil in 2022. Viterra is the third-largest corn exporter and seventh biggest soybean seller. It acquired Gavilon the previous year and used it to gain more ground in the buying and selling grain business.
If the deal goes through, the new entity could own more than 23% of Brazil corn exports and 20.9% of the country’s soybean exports. In the US, the merger could make it a top soy exporter alongside ADM and Cargill. The new entity will also gain grounds in other major agricultural exporting regions like wheat in Australia and increase its storage sites there as well.
Bunge’s management team will run the new company and CEO Greg Heckman will head it. Viterra shareholders will own 30% of the new entity. Sumitomo Mitsui Banking Corporation (SMBC) provided the funding for the deal. The merger will still need several agreements but the expected close date is mid-2024.
Together, Bunge and Viterra will likely see revenue of more than $110 billion given that individually, they reported $67.2 billion and $54 billion, respectively, in 2022. Also, the merger is projected to create $250 million operational synergies in its first three years. There are no confirmed reports of layoffs yet as both companies combine their resources and assets.
