Bunge Inks Merger Deal With Glencore's Viterra - What's On The Cards?

Bunge Ltd BG disclosed an agreement to acquire Glencore PLC's GLNCY Viterra Limited in a stock and cash transaction.

As per the terms, Viterra shareholders would receive around 65.6 million Bunge shares worth $6.2 billion and about $2.0 billion in cash. 

Also, Bunge will assume $9.8 billion of Viterra debt related to approximately $9.0 billion of highly-liquid Readily Marketable Inventories.

The transaction is expected to close in mid-2024, subject to customary closing conditions.

Glencore and Canada Pension Plan Investment Board will each enter into a shareholder agreement with Bunge at the closing of the transaction, and each will initially be able to nominate two Bunge board members. 

Related: Bunge Nears $30B Plus Merger Deal With Viterra: Report

Bunge will repurchase $2.0 billion of its shares by 18 months post-closing of the acquisition to drive accretion to adjusted EPS. 

With the buyback, the deal is expected to be accretive to Bunge's Adjusted EPS in the first full year upon closing of the deal.

The combined business is expected to generate annual gross pre-tax operational synergies of around $250 million within three years of completion.

Upon deal-closure, Viterra shareholders will own 30% of the combined company, on a fully diluted basis, and approximately 33% after completion of the buyback.

The combined company, which will trade as Bunge, will be led by Bunge's CEO, Greg Heckman, and CFO, John Neppl.

"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...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," said Greg Heckman.

Last month, Bunge reported a first-quarter FY23 sales decline of 3.5% year-on-year to $15.33 billion, beating the consensus of $14.78 billion.

The company held $3.05 billion in cash and equivalents as of Mar. 31, 2023.

Price Action: BG shares are trading lower by 1.91% at $92.00 premarket on the last check Tuesday.