Global Merger Creates Agribusiness Giant
The OIO approved Bunge Global SA United States of America (70%), United Kingdom (8%) Various (22%) buying up to 100% of the shares in Viterra Limited Canada (50%) Channel Islands (50%) for $395,248,000. The OIO explains: “The Applicant is a Swiss incorporated global agribusiness and food company listed on the New York Stock Exchange, with headquarters in the United States. The Applicant is acquiring 100% of the shares in Viterra Limited, an agribusiness company that is headquartered in the Netherlands. Viterra’s business includes origination, storage, handling, and marketing of commodity crops”.
This is part of a very big global deal in the world of agribusiness transnational corporations. The merged company will be worth $US34 billion (including debt). “US agribusiness Bunge Ltd agreed to buy Glencore Plc-backed Viterra for $US8.2 billion in stock and cash, creating a trading giant capable of competing with the world’s biggest agricultural players…. Combining the two will create a trader big enough to take on the industry’s elite: Minneapolis-based Cargill Inc. and Chicago’s Archer-Daniels-Midland Co. The deal is the culmination of Bunge Chief Executive Greg Heckman’s transformation of the once troubled St. Louis-based crop trader into a cash-rich oilseeds champion”.
“Glencore bought Viterra and its substantial Canadian operations in 2012. It later sold a 40% stake in the company to Canada Pension Fund Investment Board and a nearly 10% stake to British Columbia Investment Management in 2016. For most of its existence, Bunge was primarily a crop merchant. Its expansion to the Americas saw it become the B in the storied ABCD quartet of trading houses that dominated agricultural markets, which also includes Louis-Dreyfus Co.”
Doing Nicely Out Of Ukraine War
“After a wrong-way bet on soybean prices resulted in a surprise quarterly loss in 2018, Heckman took the helm at Bunge, cutting costs, selling under-performing businesses and focusing on risk management. The company has also benefited from the market turmoil and volatility caused by the war in Ukraine, while a boom in renewable diesel has helped underpin profits. Bunge will assume $US9.8 billion of Viterra debt. It also plans to repurchase $US2 billion of its own stock. After the buyback, Viterra shareholders will own 33% of the merged company” (Financial Post, 13/6/23).
According to its Website, Viterra NZ is “one of New Zealand’s largest fully integrated agriculture networks, bringing growers and consumers together”, with “80+ local grower customers, 7 import ports, 2 drying facilities, 30 storage facilities, 400,000 tones of storage capacity, 2 million tonnes of product approximately handled each year, and 14 bulk products handled and growing”.
Viterra is a “Canadian grain handling business, that began as the nation’s largest grain handler, with its historic formative roots in prairie grain-handling cooperatives. Viterra Inc grew into a global agribusiness with operations in Canada, the United States, Australia, New Zealand and China” (Wikipedia). It was bought by Glencore International in 2013 for $US6.1 billion. Bunge is headquartered in St Louis, Missouri and employs approximately 40,000 people in 32 countries. I refer you to its Wikipedia page specifically the subsections “Brazilian Sourcing Protests”, “Environmental Record” and “Tax Dodging”.
Bunge does not have a presence in New Zealand but it did make a big splash in March 1997 when the Overseas Investment Commission (OIC, the predecessor of the OIO) approved it buying Australian-owned, Christchurch-based, Defiance Food Industries, the second biggest baker in Aotearoa, for $128,366,745. That same month the OIC also gave permission to another competing bidder to buy Defiance. Bunge was successful, then promptly sold Defiance to the rival bidder.
Bunge is one of the big five agribusiness transnational corporations, which always do well out of human misery, food shortages, higher prices and hunger. Note the above quote from the Financial Post article: “The company has also benefited from the market turmoil and volatility caused by the war in Ukraine”. Capitalism never misses an opportunity to turn a profit.