US agribusiness giant Bunge has agreed to merge with Glencore-backed Viterra in an $8.2bn stock and cash transaction in a deal with significant ramifications for the dry bulk shipping industry.
Viterra said that its merger with Bunge would create a global agribusiness company with an enhanced global network and a diversified portfolio of assets across geographies and crops.
Under the terms of the agreement, unanimously approved by the boards of directors of both companies, Viterra shareholders would receive approximately 65.6m shares of Bunge stock worth around $6.2bn, and approximately $2bn in cash. As part of the transaction, Bunge will assume $9.8bn of Viterra debt as well.
Bunge does plan to repurchase $2bn of its stock as soon as possible but no later than 18 months after the merger close. As a result of the transaction, Viterra shareholders would own 30% of the combined company and approximately 33% after the completion of the Bunge repurchase plan.
The merger is expected to close in mid-2024 after it receives regulatory approvals and is approved by Bunge shareholders.
“Together, we will be positioned to increase our operational efficiency while innovating to address the pressing needs of food security, efficiency for end-customers, market access for farmers, and sustainable food, feed and renewable fuel production,” Greg Heckman, Bunge’s CEO, said.
Following the close of the transaction, the combined company will be led by Heckman and John Neppl, Bunge’s CFO.
Viterra’s CEO David Mattiske will join the Bunge executive team as the co-chief operating officer. The combined company will operate as Bunge with operational headquarters in St Louis, Missouri. Viterra’s Rotterdam headquarters in Rotterdam will continue operations as a commercial location in the combined company.
The Bunge board of directors is expected to be comprised of eight Bunge-nominated representatives and four representatives nominated by Viterra shareholders after the completion of the transaction.
Glencore and CPP Investments will each enter into a shareholder agreement with Bunge at the closing of the transaction with each being able to nominate two Bunge board members.
