Bunge Ltd’s deal to buy Glencore-backed Viterra will create an agriculture giant that’s likely to face anti-trust scrutiny in Argentina, the world’s largest exporter of soy products.
The combined company could end up with 40 percent of the oilseeds processing capacity in Argentina if a previously agreed deal to rescue bankrupt soy supplier Vicentin SAIC goes through, according to Bloomberg calculations using data from grain brokerage JJ Hinrichsen. That’s likely to spark regulatory scrutiny.
The St Louis-based agribusiness agreed to buy Viterra for US$8.2 billion in stock and cash, creating a trading giant capable of competing with the world’s agriculture elite: Minneapolis-based Cargill Inc. and Chicago’s Archer-Daniels-Midland Co. The deal is expected to take 18 months to close, with the company saying it will have to file for approval “in a number of jurisdictions.”
Argentina is the region with the most significant overlap between the two companies, Goldman Sachs Group Inc said in a report last month. Bunge and Viterra each have 12 percent of the country’s oilseeds processing capacity. If the US$1.3-billion restructuring deal to rescue Vicentin together with a local cooperative goes through, that would take their market share to 40 percent.
Still, Bunge’s Chief Executive Officer Greg Heckman declined to comment on any possible divestments the company may have to make to get the deal approved, only saying Bunge will update investors throughout the process.
“We want to sit down and engage in a very constructive, meaningful manner with the regulators,” Heckman said in an interview. “And frankly, the way the assets fit together is very complementary.”
by Jonathan Gilbert, Tarso Veloso & Isis Almeida, Bloomberg