Bunge, Viterra Agree to Merge

OMAHA (DTN) -- In one of the worst-kept secrets of the grain trade, Bunge Limited and Viterra Limited on Tuesday announced they have agreed to a merger in a deal worth approximately $18 billion.

The merger joins two major global grain traders that combined for $121 billion in sales last year. In their presentation announcing the merger, Bunge and Viterra cited the combined company would have $140 billion in revenue and roughly $3 billion in net income.

The merger was reported initially weeks ago as talks continued between the two companies. According to the deal, shareholders for Netherlands-based Viterra will get 65.6 million shares of Bunge stock, valued at $6.2 billion, and approximately $2 billion in cash. Bunge will assume $9.8 billion in Viterra's debt, which the companies stated, "is associated with approximately $9 billion in highly-liquid Readily Marketable Inventories."

To add more value to the purchase, Bunge announced it would buy back $2 billion of its stock as well.

By combining their "complementary global value chains," the two companies "will offer farmers greater market access and differentiated, value-added solutions in all key origins. Food, feed & fuel customers will benefit from a broader product portfolio and expanded global supply options."

The merger likely will generate a federal anti-trust review as well as a review from the Committee on Foreign Investment in the U.S. because Viterra is based in Europe.

The deal comes less than a year after Viterra completed the acquisition of Gavilon. Bunge CEO Greg Heckman was formerly president and CEO of Gavilon and had worked there for 30 years. Heckman has been CEO of Bunge since 2019.

Since taking over Gavilon, Viterra lists 105 facilities in the U.S and 76 across Canada, concentrated in Saskatchewan.

Bunge, now based in St. Louis, Missouri, lists more than 300 grain and oilseed processing facilities in more than 40 countries and 23,000 employees. Bunge reports operating 56 crush plants with 57 million metric tons (mmt) of capacity, 26 port terminals, 47 oil refineries and 17 grain mills. In its latest annual report, Bunge cited that 36% of its processing capacity was based in South America, 26% in North America, 23% in Europe and 15% in Asia-Pacific.

Viterra lists more than 30 processing and refining facilities, as well as 29 port terminals along with more than 200 ocean vessels with 17,500-plus employees in 37 countries. Viterra reports the company handled 102 mmt of commodities in 2022.

Combined, the two companies would have 125 crushing and refining facilities globally along with 55 port terminals and more than 350 grain storage facilities. The combined company would market more than 230 mmt of commodities and products.

In announcing the deal, Heckman said, "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. With a diversified global mix of earnings across processing, handling and merchandising, and value-added products, we will increase the resiliency of our cash flow generation. We have great respect for the team at Viterra, which shares our commitment to excellence, and believe this combination will offer great opportunities for employees of both companies. 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."

David Mattiske, Viterra's CEO added, "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. Together, we will play a leading role in the future of the agriculture industry, developing fully traceable, sustainable supply chains and moving towards carbon-neutral operations, while creating a strong growth platform for our combined business. This further enables us to offer innovative solutions and open additional pathways for our customers. We will create value for stakeholders across our network, as we build on our shared purpose to connect producers and consumers around the world.

"We look forward to joining with 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," Mattiske continued.

Bringing the two companies together would generate approximately $250 million in "annual gross pre-tax operational synergies," the companies stated.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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