Bunge Ltd., White Plains, N.Y., announced Sept. 12 that it has entered into a definitive agreement to acquire a 70 percent ownership interest in Malaysian palm oil processor IOI Loders Croklaan from IOI Corp. Berhad for $946 million, comprising €297 million and $595 million in cash. Bunge said the transaction expands its value-added capabilities, reach, and scale across core geographies to establish Bunge as a global leader in B2B oil solutions.
Bunge said Loders is an established leader in the growing $33 billion semi-specialty and specialty B2B oils market. Its portfolio includes the full range of palm and tropical oil-derived products, with strength in confectionery, bakery, and infant nutrition applications. Loders serves global food industry customers in more than 100 countries around the world and reported fiscal year 2016 revenues of $1.6 billion. The transaction is expected to close within a year.
IOI will retain a 30 percent ownership interest and customary protective rights. As part of the transaction, for a period of five years after closing, Bunge will have the right to purchase the remaining interest in Loders from IOI, and IOI will have the right to sell its interest to Bunge.
Bunge has entered into a $900 million, unsecured, delayed draw, three-year term loan agreement with Sumitomo Mitsui Banking Corp., which may be used to finance the acquisition.
Bunge CEO Soren Shroder, in an interview with Bloomberg, said the company has long communicated its plans to expand into the oil business, and the timing of the announcement does not have anything to do with recent speculation about industry consolidation. In May, Bunge rebuffed an attempt by Glencore plc, Baar, Switzerland, to acquire Bunge (GM May 26, p. 24). After the IOI news, Bunge shares tumbled as much as 7.7 percent, the biggest intraday decline in four months, according to Bloomberg, as investors saw a Bunge-Glencore deal less likely.
Shroder said Bunge is also interested in further consolidation, eyeing grain origination and oilseed crushing, mainly through partnerships and regional opportunities.