(CTN News) – It has been announced that Bunge has agreed to buy Viterra for approximately $18 billion in a deal that will create a global agriculture company.
A total of approximately 65.6 million shares of Bunge stock will be distributed to Viterra shareholders, valued at about $6.2 billion, and a cash payment of about $2 billion will also be made.
As part of the deal, Bunge will assume $9.8 billion in debt owed by Viterra.
It is expected that Bunge’s capacity to handle grain and softseed will grow as the company expands its origination capabilities in key regions where Bunge does not have a strong presence as well as in crops where it is not as well established.
The combination of Bunge and Viterra is expected to significantly accelerate Bunge’s strategy, building on our fundamental mission to connect farmers to consumers so we can deliver essential food, feed, oil and fuel to the world, according to Bunge CEO Greg Heckman in a prepared statement on Tuesday.
It is anticipated that the merger between Bunge and Archer-Daniels Midland will create a scale which will enable Bunge to compete against a company such as Cargill, one of the nation’s largest private companies.
Due to the merger, however, the company will also likely be in the crosshairs of anti-trust regulators in the United States as a result of the buyout.
In addition to continuing to operate under the Bunge name, the new company will have its headquarters in St. Louis, Missouri. This is the first time that Viterra will have a commercial location in the Netherlands at its headquarters in Rotterdam.
A number of other investors are also participating in the deal, including Glencore, the Canada Pension Plan Investment Board, and British Columbia Investment Management.
After the deal closes, eight Bunge directors will be appointed to the board of the combined company, and four Viterra shareholders will be nominated to be on the board as well.
By the middle of next year, the transaction is expected to be completed. Bunge Inc. shareholders still need to approve the proposal before it can be implemented.
It was reported that Bunge’s stock had declined by 1.9% before the market opened.