Deal To Create Global Agriculture Trading Giant In The Works

A merger of US grains merchant Bunge with rival Viterra would grow the combined entity’s businesses in the US, Brazil and Australia and may raise competition concerns in parts of Canada and Argentina, where key oilseed processing assets overlap, analysts said.

Sources last week said Bunge and Glencore Plc-owned Viterra were in talks for a potential mega deal that would further consolidate global agriculture trading and bring Bunge closer in global scale to leading rivals Archer-Daniels-Midland and Cargill, reported Reuters.

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“Combining Bunge and Viterra in regions like North America and Europe certainly would strengthen the combined company’s presence there and put them more on par with ADM,” said Seth Goldstein, equity analyst with Morningstar.

“Bunge is already the leader in South America. That might be a region where there might be some divestitures required if a deal were to close there to make sure that there’s still competition,” he added.

According to J.P. Morgan equity research, the market capitalization of the combined company is estimated to be approximately $25 billion, in comparison to ADM’s current market cap of $38.9 billion.