Bunge and Viterra to combine to create a premier diversified global agribusiness solutions company

On June 13, 2023, Bunge Limited (NYSE: BG) (″Bunge″) announced it has entered into a definitive agreement with Viterra Limited, a private company limited by shares incorporated under the laws of Jersey (″Viterra″), together with certain affiliates of Glencore PLC (LSE: GLEN) (″Glencore″), Canada Pension Plan Investment Board (″CPP Investments″) and British Columbia Investment Management Corporation (″BCI″), to merge with Viterra in a stock and cash transaction. The merger of Bunge and Viterra will create an innovative global agribusiness company well positioned to meet the demands of increasingly complex markets and better serve farmers and end-customers. With an enhanced global network, the combined company’s increased diversification across geographies, seasonal cycles and crops will increase optionality in managing risk and increase resiliency. Together, the highly complementary organizations will benefit from more diversified capabilities, greater operational flexibility across oilseed and grain supply chains and processing, greater resources and combined employee talent to innovate and deliver for customers in every environment, creating value for all stakeholders.  

Under the terms of the agreement, which was unanimously approved by the Boards of Directors of Bunge and Viterra, 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, which is associated with approximately $9.0 billion of highly-liquid Readily Marketable Inventories.

In addition, Bunge plans to repurchase $2.0 billion of Bunge’s stock (the ″Repurchase Plan″) to enhance accretion to adjusted EPS. Bunge intends to commence repurchases as soon as practically possible, subject to market conditions and SEC rules on trading restrictions, and 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.

Greg Heckman, Bunge’s Chief Executive Officer said, ″The combination of Bunge and Viterra significantly accelerates Bunge’s strategy, building on our fundamental purpose to connect farmers to consumers to deliver essential food, feed and fuel to the world. Our highly complementary asset footprints will create a network that connects the world’s largest production regions to areas of fastest growing consumption, enhancing the geographical balance and adaptability of our global value chains and benefitting farmers and end-customers. With a diversified global mix of earnings across processing, handling and merchandising, and value-added products, we will increase the resiliency of our cash flow generation. We have great respect for the team at Viterra, which shares our commitment to excellence, and believe this combination will offer great opportunities for employees of both companies. 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.″

David Mattiske, Viterra’s Chief Executive Officer said, ″Viterra and Bunge are two leading agriculture businesses. In combining our highly complementary origination, processing and distribution networks, we are better positioned to meet the increasing demand for the food, feed and fuel products we offer. Together, we will play a leading role in the future of the agriculture industry, developing fully traceable, sustainable supply chains and moving towards carbon-neutral operations, while creating a strong growth platform for our combined business. This further enables us to offer innovative solutions and open additional pathways for our customers. We will create value for stakeholders across our network, as we build on our shared purpose to connect producers and consumers around the world. We look forward to joining with the Bunge team as we enter this next chapter, creating new opportunities for our people. The combined talent and experience of our workforce will allow us to offer a truly world-leading service across everything we do.″

Strategic and Financial Benefits of the Combination

Global, Pure-Play Agribusiness Solutions Company: With Bunge and Viterra’s highly complementary asset footprints, the combined company will be strongly positioned to connect the world’s largest production regions to areas with the fastest growing consumption.

• The combination augments Bunge’s existing footprint with significant grain and softseed handling capacity, while expanding origination capabilities in key regions and crops where Bunge is underrepresented. The combined company will be diversified across the key export origins, as well as major crush destinations.
  

• Increased direct origination reach will transform the combined company’s ability to promote sustainable practices in global food supply, including origination transparency, low carbon product streams, full end-to-end traceability across major crops and origins, and the acceleration of regenerative agriculture to reduce greenhouse gas emissions.

Enhanced Ability to Meet the Demands of Increasingly Complex Markets:  Better balance of value chains across geographies, access to more key origination markets and a diversified agriculture network covering all major crops will enhance the combined company’s ability to provide solutions for end-customers in any environment.

• Combining Bunge and Viterra’s highly complementary global value chains and origination capabilities will offer farmers greater market access and differentiated, value-added solutions in all key origins. Food, feed & fuel customers will benefit from a broader product portfolio and expanded global supply options.
  

• Together, Bunge and Viterra will have greater capacity to invest in global initiatives that enhance and connect value chains with increased optionality to provide solutions to farmers and end-customers.

• Enhanced network benefits will foster efficiencies, connectivity and capabilities across value chains while the combined company’s shared commitment to excellence will foster a ″best practice sharing″ mindset, with greater capacity to invest in teams and technology, such as training and development, advancement of low CI products and other sustainable solutions and digitalization of activities.
  

Proven Management Teams with Track Records of Value Creation: The combined organization brings together two world-class management teams and is well-positioned to create meaningful value for all shareholders with its highly compelling financial profile.

• The combination is expected to generate approximately $250 million of annual gross pre-tax operational synergies within three years of completion. Additionally, the combination is expected to benefit from significant incremental network synergies across joint commercial excellence opportunities, vertical integration efficiencies, and improved logistics optimization and trading optionality from a larger and broader network. The combined company expects to see relatively more stable cash flows from the larger, more diversified footprint. The improvement in the business risk and credit profile of the combined company is expected to drive capital structure efficiencies and cost of capital benefits. The transaction, coupled with the associated $2.0 billion share buyback, is expected to be accretive to Bunge’s Adjusted EPS in the first full year post closing and continue to improve with the realization of synergies.
  

• The ratings of the combined company at transaction closing are expected to remain strong investment grade, with a pro-forma 2022 adjusted leverage ratio of 1.6x, after factoring in the $2.0 billion share buybacks. The combined company anticipates being able to execute its growth and shareholder plans going forward, while maintaining its current ratings. The transaction is fully funded with a financing commitment of $7.0 billion provided by Sumitomo Mitsui Banking Corporation.

Governance and Leadership

Following the close of the transaction, 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 combined company will operate as Bunge, NYSE: BG with operational headquarters in St. Louis, Missouri. Viterra’s current headquarters in Rotterdam will be an important commercial location in the future of the combined company.

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 (the ″Shareholder Agreements″) and each will initially be able to nominate two Bunge board members. Pursuant to the Shareholder Agreements, Glencore and CPP Investments have agreed, among other things, to certain standstill provisions until their ownership falls below a threshold percentage and to a 12-month lock-up period on sales of Bunge shares.

Timing and Approvals

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.

Advisors

BofA Securities is acting as financial advisor and Latham & Watkins LLP is acting as legal counsel to Bunge.