Viterra and Bunge engage in merger talks

02 June 20232 min reading

Bunge and Viterra, two of the world's major global grain companies, have reportedly entered into talks to merge. A possible merger between the two companies, which would mean further consolidation in the global grain trade, would bring Bunge closer to its leading global competitors Archer Daniels Midland and Cargill.

A mega deal in the global grain trade was reported by Reuters.  According to Reuters, Bunge, the world leader in oilseed processing, is in talks with Viterra, one of the global grain giants, to merge under a mega deal that has the potential to reshape the global grain trade. However, the source who informed Reuters about the talks said that there is no certainty about the deal yet.

Combining forces in regions such as North America and Europe will strengthen Bunge and Viterra's presence there and put them on more equal footing with competitor ADM. According to JP Morgan, the combined company will have a market capitalisation of around $25 billion, compared to ADM's $38.9 billion.

Viterra expanded its grain trading business last year with the acquisition of US-based Gavilon. A potential merger with Viterra would allow Bunge to expand its grain export and oilseed processing operations in the country, where it has a smaller presence than ADM and Cargill.

The merger would also create a dominant exporter in Brazil, one of the world's agricultural powerhouses, and a market-leading soybean processor in Argentina. Last year, Bunge was the largest exporter of corn and soybeans in Brazil, the world's largest supplier of staples used in animal feed and biofuels. Viterra was the country's third largest exporter of corn and seventh largest exporter of soybeans. Together, the two companies accounted for about 23.7% of Brazilian corn exports and 20.9% of soybean exports in 2022, according to Cargonave data.

A possible merger would also increase Bunge's grain storage and handling capacity in Australia, a major wheat exporting country. The company currently operates only two grain elevators and a port terminal in the western part of the country. Viterra has 55 storage facilities and six grain export terminals in South Australia and western Victoria. The Bunge-Viterra partnership will also have three oilseed processing facilities in Ukraine, the world's largest producer of sunflowers and the largest supplier of sunflower oil.

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