Bunge Announces $8.2 Billion Merger With Viterra

Agriculture firm Bunge Limited (NYSE: BG) has announced a definitive agreement to merge with global agribusiness company Viterra Limited. The merger aims to create a robust and innovative entity capable of meeting the demands of complex markets and serving farmers and end-customers effectively.

The agreement involves Bunge, Viterra, and affiliates of Glencore, Canada Pension Plan Investment Board (CPP Investments), and British Columbia Investment Management Corporation. The merger “will enhance the combined company’s global network, diversifying its operations across geographies, seasonal cycles, and crops, thereby increasing its risk management options and resilience.”

According to the terms of the agreement, Viterra shareholders will receive approximately 65.6 million shares of Bunge stock, valued at around $6.2 billion, and approximately $2.0 billion in cash. The consideration mix comprises approximately 75% Bunge stock and 25% cash. Bunge will also assume $9.8 billion of Viterra debt, associated with approximately $9.0 billion of highly-liquid Readily Marketable Inventories.

“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,” said Bunge CEO Greg Heckman.

To enhance accretion to adjusted earnings per share, Bunge plans to initiate a $2.0 billion stock repurchase plan. The company intends to commence repurchases as soon as possible, subject to market conditions and SEC rules, and expects to complete the plan within 18 months following the transaction’s closure. Upon completion of the repurchase plan, Viterra shareholders will own approximately 30% of the combined company on a fully diluted basis and around 33% thereafter.

The merger is projected to generate approximately $250 million in annual gross pre-tax operational synergies within three years of completion. The combined company is expected to maintain strong investment-grade ratings, with a pro-forma 2022 adjusted leverage ratio of 1.6x, factoring in the $2.0 billion share buybacks. The financing commitment of $7.0 billion for the transaction has been provided by Sumitomo Mitsui Banking Corporation.

CPP Investments, a shareholder in Viterra since 2016, has also expressed support for the merger. CPP Investments will hold an approximate 12% equity position in the combined company and receive $0.8 billion in cash upon the transaction’s close. Glencore and British Columbia Investment Management Corporation, the other Viterra shareholders, will also become shareholders of Bunge.

The merger will be led by Heckman and John Neppl, Bunge’s CFO. David Mattiske, CEO of Viterra, will join Bunge’s Executive Leadership Team as Co-Chief Operating Officer. The combined company will operate as Bunge, with operational headquarters in St. Louis, Missouri, and Viterra’s current headquarters in Rotterdam will serve as a key commercial location.

Upon completion of the merger, the Bunge Board of Directors will consist of eight Bunge-nominated representatives and four representatives nominated by Viterra shareholders.

Glencore and CPP Investments will enter into shareholder agreements with Bunge upon closing the transaction. Each will be able to nominate two Bunge board members initially. The shareholder agreements include standstill provisions until their ownership falls below a threshold percentage and a 12-month lock-up period on the sale of Bunge shares.

The merger is expected to close in mid-2024, subject to customary closing conditions, regulatory approvals, and approval by Bunge shareholders.

Bunge last traded at $93.79 on the NYSE.

Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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