Yahoo Finance Federal watchdog expresses 'serious' concerns about US$8.2B agri-business deal
Canada’s Competition Bureau says Bunge Global’s (BG) proposed US$8.2 billion deal to acquire Glencore-backed (GLEN.L) Viterra would create an agricultural trading giant likely to harm competition in Canada’s grain and canola oil markets.
The federal competition watchdog released a report on Tuesday stating the combination would cause a “significant loss of rivalry.” The agency’s non-binding opinion has been sent to Canada’s transport ministry, which has until June 2 to review the deal. The federal government will ultimately decide if the transaction proceeds.
Last year, Bunge and Viterra announced an $8.2 billion cash-and-stock deal that would see Bunge assume US$9.8 billion of Viterra debt. Bunge would also repurchase US$2 billion of its own stock. After the buyback, Viterra shareholders will own 33 per cent of the merged company. The transaction is expected to close in mid-2024.
Missouri-based Bunge and Viterra are each global, vertically integrated agriculture companies with significant operations in grain origination, processing, marketing, and export in Canada. A combined company would have more scale to compete with major industry players like Minneapolis-based Cargill and Chicago's Archer-Daniels-Midland (ADM.TO).
In its report, the bureau identified “serious competitive implications,” including influence over Saudi-owned G3, a major competitor to Viterra in Canada. Bunge is a minority shareholder of G3.
“The grain supply chain is a critical part of Canada's economy, generating economic growth and international trade, and ensuring Canada's domestic food supply,” the Competition Bureau stated. “Maintaining healthy competition in the grain supply chain is therefore vital to the interests of Canadians.”
In a joint statement on Tuesday, Bunge and Viterra called the bureau’s concerns “misplaced.”
“The companies operate complementary businesses in markets with numerous effective competitors,” they wrote. “We are pleased the regulatory process is advancing and are confident the transaction will yield considerable benefits to Canada.”
Earlier this month, Bunge and Viterra announced the combined company will be led by Greg Heckman, Bunge’s chief executive officer, and John Neppl, Bunge’s chief financial officer. Viterra CEO David Mattiske will become co-chief operating officer.
“Food, feed and fuel customers will benefit from a broader product portfolio and expanded global supply options," Heckman stated in an April 16 news release.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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