Viterra in talks to merge with Bunge

Global grain trader Viterra is in talks to merge with US rival Bunge 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, will be able to reach an agreement on the terms. The deal structure is being discussed by both parties.

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 seventh soybean shipper.

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

Shares of Bunge closed at a three-week high of US$93.61 on Thursday, valuing the company at about US$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 US-based Gavilon from Japan's Marubeni last year for US$1.1 billion, giving it significantly more physical grain handling assets in the US 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 US$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.