Bunge Global SA has signaled that its $8.2 billion acquisition of Viterra Ltd. is inching closer, with the US agribusiness offering to replace debt previously issued by the Glencore Plc-backed firm, Bloomberg reported on Sept. 9.
The $1.95 billion debt-exchange offer comes after an initial delay to close the deal by August and is a sign the buyout is likely to be completed “over the coming months,” S&P Global Ratings said in a report. Regulatory approval is still pending in countries including Canada, where both companies have significant operations.
“We believe the announced transaction signals management’s increased confidence that the transaction will close sometime in the second half of 2024,” Chris Johnson, an analyst at S&P, said in the report.
Bunge, the ‘B’ in the storied ABCD quartet of agricultural commodity traders that have dominated crop markets for more than a century, agreed to acquire Viterra in June 2023 (GM June 16, 2023). The deal is expected to create a $25 billion behemoth capable of competing with the industry’s elite: Cargill Inc. and Archer-Daniels-Midland Co., the ‘A’ and the ‘C.’ Louis Dreyfus Co. represents the ‘D.’
Bunge has recently allayed competition concerns in Europe (GM Aug. 9, p. 28), agreeing to divest Viterra’s entire oilseeds business in Hungary and Poland. The transaction has also been approved by regulators in Brazil (GM May 17, p. 27) and Australia (GM Dec. 22, 2023).
Concerns remain in Canada, however, where the country’s Competition Bureau in April concluded that the deal is likely to result in “substantial anti-competitive effects” and a “significant loss of rivalry” between Viterra and Bunge in Canadian agricultural markets (GM April 26, p. 1).
“We continue to believe the combined operations in Canada do not have significant geographic overlap suggesting material conditional divestitures may not be required,” S&P said, adding it had raised Bunge’s outlook to positive, the first step toward lifting the company’s ratings.
The improved outlook comes even as Viterra has seen income halve this year, driven by a downturn in prices for everything from corn to soybeans. The company made a profit of $70 million in the first six months of 2024, Bunge said in a regulatory filing on Sept. 9, a drop from $141 million a year earlier.