Grain trader Viterra in talks to merge with rival Bunge – source

By Anirban Sen and Karl Plume

(Reuters) -Global grain trader Viterra is in talks to merge with U.S. rival Bunge (NYSE:) Ltd, a person familiar with the matter said, in a potential mega deal that would reshape the top tier of global grains merchants.

There is no certainty that Viterra, part-owned by Switzerland-based mining and trading giant Glencore (OTC:), will be able to reach an agreement on the terms, the source said, requesting anonymity as these discussions are confidential.

The deal structure is being discussed by both parties, sources said.

Any deal would be closely scrutinized by regulators as trade in staples such as wheat, corn and soybeans is already concentrated among Bunge and three other large players, raising global concerns about food security.

Bunge last year was the largest corn and soy exporter from Brazil, the world’s top source of the staple crops for making animal feed and biofuels, according to data from shipping agent Cargonave. Viterra was the third largest corn exporter and No. 7 soybean shipper.

A merger with Viterra would also lift Bunge, with 2022 revenues of $67.2 billion, closer to its nearest publicly traded agribusiness rival Archer-Daniels-Midland Co, which registered sales of nearly $102 billion last year.

Shares of Bunge closed at a three-week high of $93.61 on Thursday, valuing the company at about $14 billion. Glencore shares fell 0.7%.

Global commodities merchants have built up cash reserves after turning in hefty profits over the past year as Russia’s invasion of Ukraine disrupted shipments and crop prices soaring.

The agribusinesses make money buying, selling, storing and processing crops, often capitalizing on supply disruptions caused by crises like drought or war.

A merger with Bunge would put Viterra among the top tier of global grains merchants, with access to export terminals in the United States, one of largest grain producers and suppliers.

Viterra bought U.S.-based Gavilon from Japan’s Marubeni last year for $1.1 billion, giving it significantly more physical grain handling assets in the U.S. and making it the third-largest exporter of soybeans in Brazil, where Bunge already has a strong presence.

Viterra, formerly known as Glencore Agriculture, made the headlines in 2017 for a failed takeover approach to Bunge, one of the giant names of global grain trading, then valued at $11 billion.

In May 2017, Bunge rebuffed Glencore after the latter made an informal approach to discuss “a possible consensual business combination.”

Glencore had publicly said it was reviewing options for its interest in Viterra, looking to unlock more value.

Glencore, Viterra and Bunge declined to comment. Bloomberg first reported on the talks between Viterra and Bunge.