By Jean-Paul MacDonald, Farms.com
Glencore PLC has announced that its grain handling investment, Viterra Ltd, has entered into an agreement to be acquired by New York-listed agricultural firm Bunge Ltd. As part of the deal, Glencore will surrender its 50% stake in Viterra in exchange for USD3.1 billion worth of Bunge shares and USD1.0 billion in cash, granting Glencore a 15% stake in the combined group.
The acquisition of Viterra will result in the formation of a larger and more diversified business, poised for substantial synergies and potential re-rating. Glencore emphasized that it intends to retain its Bunge shares for at least 12 months following the completion of the deal. Viterra shareholders will receive a combination of 65.6 million Bunge shares, valued at USD6.2 billion, and USD2.0 billion in cash. Bunge will also assume USD9.8 billion in Viterra debt.
Upon completion of the transaction, Viterra shareholders will own 30% of the expanded company, with the possibility of increasing to 33% following Bunge's planned USD2.0 billion share buyback.
The merger positions the combined entity as a leading pure-play agribusiness solutions company, equipped to meet growing global demand and address sustainability challenges by providing traceable and sustainable food and feed products worldwide.
Glencore CEO Gary Nagle expressed confidence in the transaction's ability to generate significant value and establish a fully integrated global agriculture network. Meanwhile, Glencore is actively pursuing its own deal-making endeavors, having recently made a bid to acquire Teck Resources Ltd's steel-making coal business.
The consolidation of Viterra and Bunge marks a milestone in the agriculture industry, forming a powerhouse that aims to leverage its combined strengths to meet the evolving demands of the global food and agriculture market while creating value for all stakeholders involved.