A US$8.2-billion merger between U.S. company Bunge Ltd. and Viterra Ltd. will create a global agricultural giant in an industry that has already seen a significant amount of consolidation in recent years.
The deal was announced Tuesday by the Missouri-based Bunge — which is the world's largest oilseeds processing company, operating 300 facilities in more than 40 countries worldwide — and Viterra, which is owned by Swiss commodities giant Glencore, as well as the Canada Pension Plan Investment Board and B.C. Investment Management Corp.
Under the terms of the agreement, Viterra's shareholders will receive 65.6 million Bunge shares, valued at a total of about US$6.2 billion, and about US$2.0 billion in cash. Bunge will also assume US$9.8 billion of Viterra debt.
Viterra shareholders will own 30 per cent of the combined company on a fully diluted basis when the deal closes and about 33 per cent after completion of a planned US$2-billion share repurchase plan by Bunge.
Viterra, formerly the iconic Saskatchewan Wheat Pool, is a grain-handling business that has more than 80 facilities across the country and exports into more than 70 countries.
According to the companies, the merger will bring together Bunge and Viterra’s complementary asset footprints, augmenting Bunge's grain and softseed handling capacity and helping to connect the world's largest agricultural regions with consumers around the globe.
“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," said Greg Heckman, Bunge CEO, in a news release.
The merger will offer farmers greater market access for their products, the companies added.
"This further enables us to offer innovative solutions and open additional pathways for our customers," said Viterra CEO David Mattiske.
However, the merger is also part of an ongoing wave of consolidation in the agriculture sector in recent years. Among notable mergers have been German company Bayer's 2018 US$66-billion blockbuster deal to acquire Monsanto, as well as the 2018 merger between Agrium Inc. and PotashCorp of Saskatchewan, which created Nutrien Inc., the largest potash producer in the world today.
Viterra itself was acquired by Glencore in 2012 for $6.1 billion. Glencore later sold a 40 per cent stake in the company to CPP Investments and a nearly 10 per cent stake to B.C. Investment Management in 2016.
On Tuesday, the federal Competition Bureau confirmed it will be reviewing the proposed Viterra-Bunge merger in accordance with the federal Competition Act.
"The Bureau has a mandate to review mergers to determine whether they are likely to result in a substantial lessening or prevention of competition," said spokesman Jayme Albert in an email.
"Should we determine that the proposed transaction is likely to harm competition, we will take appropriate action."
One potential sticking point for regulators could be the fact that Bunge already owns a 25 per cent stake in G3 Global Grain Group, which was once the Canadian Wheat Board. G3 operates grain elevators in many of the same regions as Viterra.
Shannon Sereda, director of government relations, policy and markets for the Alberta Wheat Commission, said her organization is monitoring the proposed deal.
"Our mandate is to support competitive markets for our farmers, so as more details emerge, we'll of course be looking to study the impacts of the merger," she said in an interview.
"But it's very early days."
CPP Investments said Tuesday it expects to receive about a 12 per cent stake in the combined company and US$800 million in cash in exchange for its interest in Viterra.
The merger is expected to close in the middle of 2024, subject to customary closing conditions, including regulatory approvals and approval by Bunge shareholders.
The combined company will be led by Heckman and Bunge chief financial officer John Neppl, while Viterra chief executive David Mattiske will become co-chief operating officer.
The board of the combined company is expected to include eight Bunge nominated directors and four nominated by Viterra shareholders after the deal is completed.
This report by The Canadian Press was first published June 13, 2023.
Amanda Stephenson, The Canadian Press