US agricultural giant Bunge has agreed to merge with Viterra in a stock and cash transaction in a deal that will affect significantly the dry bulk business, as it will create a global agribusiness company well positioned to meet the demands of increasingly complex markets such as shipping.
Viterra shareholders would receive approximately 65.6 million shares of Bunge stock, with an aggregate value of approximately $6.2 billion, and approximately $2.0 billion in cash, representing a consideration mix of approximately 75% Bunge stock and 25% cash. As part of the transaction, Bunge will assume $9.8 billion of Viterra debt.
Bunge plan to repurchase $2.0 billion of Bunge’s stock and intends to commence repurchases as soon as practically possible, subject to market conditions and SEC rules on trading restrictions.
The company expects to complete the repurchase plan no later than 18 months post transaction close. Viterra shareholders would own 30% of the combined company on a fully diluted basis upon the close of the transaction, and approximately 33% after completion of the repurchase plan.
The merger is expected to close in mid-2024, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval by Bunge shareholders.
Greg Heckman, Bunge’s Chief Executive Officer said, “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.”
Bunge claims that with this merger the combined company expects to see relatively more stable cash flows from the larger, more diversified footprint.
After the transaction is closed the combined company will be led by Greg Heckman, Bunge’s Chief Executive Officer, and John Neppl, Bunge’s Chief Financial Officer. Viterra Chief Executive Officer David Mattiske will join the Bunge Executive Leadership Team in the role of Co-Chief Operating Officer.
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 and each will initially be able to nominate two Bunge board members.