{"id":22196,"date":"2023-06-13T18:31:06","date_gmt":"2023-06-13T22:31:06","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/grain-processor-bunge-to-combine-with-glencore-backed-viterra-to-create-global-agribusiness-leader\/"},"modified":"2023-06-13T18:31:07","modified_gmt":"2023-06-13T22:31:07","slug":"grain-processor-bunge-to-combine-with-glencore-backed-viterra-to-create-global-agribusiness-leader","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=22196","title":{"rendered":"Grain processor Bunge to combine with Glencore-backed Viterra to create global agribusiness leader"},"content":{"rendered":"
\n

Grain and oilseed processor\u00a0Bunge Ltd. said Tuesday it has agreed to combine with Rotterdam-based Viterra Ltd. in a cash-and-stock deal valued at about $18 billion, including debt.<\/p>\n

Shareholders of Viterra, which is backed by Glencore PLC
\n GLEN,
\n +5.28%<\/bg-quote>,<\/span>
\n will receive 65.6 million Bunge shares
\n BG,
\n +2.54%<\/bg-quote>
\n valued at $6.2 billion and about $2 billion in cash. Bunge will assume $9.8 billion of Viterra debt, which is linked to about $9 billion of highly-liquid Readily Marketable Inventories. Bunge has further committed to buying back $2 billion of its own stock within 18 months of the deal closing.<\/p>\n

\n

The combined company is expected to create a global agribusiness that is \u201cwell positioned to meet the demands of increasingly complex markets and better serve farmers and end-customers,\u201d the companies said in a joint statement. <\/p>\n

\u201cWe\u2019re bringing together two highly complementary businesses. It\u2019s simply just a great, great strategic fit, and it gets us where we wanted to go faster, better, and with less risk,\u201d Bunge Chief Executive Greg Heckman told analysts on a call to discuss the deal, according to a FactSet transcript.<\/p>\n

Bunge has a strong presence in the U.S., Brazil and Europe but only a modest presence in other key regions, he said. Viterra has a footprint that extends to the U.S., Canada, Australia, Europe and Argentina. <\/p>\n

\u201cViterra is also a leading seaborne merchant that has successfully developed extensive direct origination capabilities with farmers in many key origins, as well as a strong presence in key demand markets, supplying over 125 countries with agricultural products,\u201d he said.<\/p>\n

The deal is expected to close in mid-2024 and to generate about $250 million of annual gross pretax operational synergies within three years of completion. The deal is expected to boost adjusted per-share earnings for Bunge one year after closing.<\/p>\n

Viterra shareholders will own about 30% of the combined company and about 33% after the stock buyback.<\/p>\n

\u201cOur highly complementary asset footprints will create a network that connects the world\u2019s largest production regions to areas of fastest-growing consumption, enhancing the geographical balance and adaptability of our global value chains and benefiting farmers and end-customers,\u201d said Heckman.<\/p>\n

Heckman will remain CEO of the combined company and Bunge\u2019s Chief Financial Officer John Neppl will retain his role. Viterra CEO David Mattiske will become co-chief operating officer. The company will be named Bunge and based at the company\u2019s headquarters in St. Louis. <\/p>\n

Read also:<\/strong> Glencore willing to consider improvements to Teck Resources proposal<\/p>\n

Glencore and Canada Pension Plan Investment Board (CPP) will enter a shareholder agreement with Bunge at the close and will initially be allowed nominate two Bunge board members.<\/p>\n

CPP said it would receive a 12% position in the combined company. CPP Investments has been a 40% owner of Viterra since 2016.<\/p>\n

S&P Global Ratings upgraded Bunge to BBB+ from BBB on the news. <\/p>\n

\u201cBunge, pre this transaction, continues to maintain very low leverage, which has provided it with the balance sheet flexibility to consummate this transformational acquisition without materially pressuring its credit measures,\u201d the rating agency said in a statement. <\/p>\n

The company has sustained debt to EBITDA of below 1.5 times for two straight years as its core agribusiness segment has benefited from a combination of strong oilseed crush and merchandising margins while the margins in its specialty oils segment have benefited from strong food and renewable feedstock demand, said the statement.<\/p>\n

S&P is expecting the company\u2019s leverage to remain near or below 1.5 times for the next few quarters prior to the merger closing, when it\u2019s expected to rise to about 1.7 times. <\/p>\n

\u201cWe project the combined entity will sustain leverage below 2x, supporting a potential upgrade to \u2018A-\u2018 if the acquisition closes without any material regulatory impediments,\u201d said S&P.<\/p>\n

Bunge shares were last up 1.8%, but have fallen 4% in the year to date, while the S&P 500
\n SPX,
\n +0.69%<\/bg-quote>
\n has gained 13%. <\/p>\n

See now:<\/strong> Commodity prices are going haywire, prompting fears of the next financial crisis<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Grain and oilseed processor\u00a0Bunge Ltd. said Tuesday it has agreed to combine with Rotterdam-based Viterra Ltd. in a cash-and-stock deal valued at about $18 billion, including debt. Shareholders of Viterra, which is backed by Glencore PLC GLEN, +5.28%, will receive 65.6 million Bunge shares BG, +2.54% valued at $6.2 billion and about $2 billion in […]<\/p>\n","protected":false},"author":1,"featured_media":22197,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-22196","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nGrain processor Bunge to combine with Glencore-backed Viterra to create global agribusiness leader | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Grain and oilseed processor\u00a0Bunge Ltd. said Tuesday it has agreed to combine with Rotterdam-based Viterra Ltd. in a cash-and-stock deal valued at about\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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