Viterra-Bunge merger a done deal, Glencore says

Bunge’s merger with Glencore-backed Viterra has closed, Glencore confirmed on Wednesday.

China granted its approval to the US$34 billion merger in mid-June — the final regulatory hurdle to the deal.

Canada approved the merger on January 14 with conditions that Bunge would divest of six Western Canadian grain elevators, invest at least C$520 million in Canada within five years, and with strict controls on Bunge’s minority stake in grain company G3.

The merger, which creates a grain giant on par with Cargill and Archer Daniels Midland (ADM), has raised concerns about the effects of market consolidation.

The Agricultural Producers Association of Saskatchewan commissioned a study by three University of Saskatchewan academics, which found that the merger could increase the export basis by 15 per cent and crush margins by 10 per cent, resulting in a $770 million net annual loss to farmers.

Bunge chief executive officer Greg Heckman responded to that study in an op-ed piece, saying the findings were based on false assumptions and incomplete data.

For instance, a fundamental assumption of the academics’ model was that the merged enterprise would operate the G3 and Viterra grain export capacities as a single firm, which Bunge says is “objectively false.”

Canada’s Competition Bureau also reported the deal was “likely to result in substantial anti-competitive effects and a significant loss of rivalry between Viterra and Bunge in agricultural markets in Canada”.

It also determined the transaction was to likely to harm competition in markets for grain purchasing in Western Canada, as well as for the sale of canola oil in Eastern Canada. Bunge and Viterra disputed these claims.

When the companies announced the merger in 2023, Bunge CEO Greg Heckman said the combined assets of the two companies would “create a network that connects the world’s largest production regions to areas of fastest growing consumption,” and improve the geographic balance and adaptibility of its supply chains.

“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,” Heckman said.

Under the merger terms, Swiss-based Glencore received 32.8 million shares in Bunge, representing 16.4 per cent of the enlarged company, and around $900 million in cash which will be subject to later adjustment under the merger terms.

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