The two companies are reportedly holding talks about combining their operations, as first reported by that media outlet.
Canada Pension Plan Investment Board and British Columbia Investment Management Corp are “willing to swap their combined 49.98% stake in Viterra for investments in the merged entity,” an anonymous source told Bloomberg.
An agricultural powerhouse on the horizon?
The amalgamation of the two grain traders would create an agricultural powerhouse valued at US$25bn, an entity to rival Cargill and ADM.
Rotterdam, Netherlands-based Viterra, which is also part owned by Swiss mining and commodity company, Glencore, is a top-five global trader in sourcing oilseeds, such as soy, rapeseed and sunflower, and grains, including wheat, corn, and barley, which are complemented by sugar, pulses, and cotton.
Bunge is headquartered in St Louis, Missouri, and has almost 23,000 employees working across 300 facilities located in more than 40 countries. It is considered a world leader in oilseed processing and a producer and supplier of specialty plant-based oils and fats.
US foothold
A merger with Bunge, which would likely be heavily scrutinised by regulators, would give Viterra access to export terminals in the US, noted Reuters.
Already the Gavilon acquisition, finalized in October last year, has gone some way to supporting Viterra’s long-term strategy of significantly increasing its presence in the US, an agricultural region where it previously only had a limited sourcing presence.
By buying that Omaha, Nebraska based grain and ingredients trading business for US$1.125bn, plus working capital, Viterra gained a large network of silos and infrastructure in the major growing areas across the US, with access to major railroads, rivers, and ports.
Earlier negotiations
Bunge and Glencore have held merger talks in the past, with the Swiss company making a play for the US trader in 2017, a deal that evidently did not come off.
Like their peers, both companies have benefitted since 2H20 from high agricultural commodity prices.
Spokepersons for Bunge and Viterra declined to comment on the speculation.
