https://www.miningweekly.com

ADM has made takeover approach to Bunge – WSJ

20th January 2018

By: Reuters

  

Font size: - +

NEW YORK – Agricultural processing and trading company Archer Daniels Midland has proposed a takeover of Bunge, the Wall Street Journal reported on Friday, a move that could set up a battle for Bunge with London-based rival Glencore  in an industry moving towards consolidation.

Bunge and other top grains traders - who make money by buying, selling, storing, shipping and trading crops - are struggling to adapt to a world of oversupply.

ADM said it does not comment on "rumours or speculation," while Bunge was not immediately available for comment.

Glencore last year sought a tie-up with grains trader Bunge in what was taken as the starting signal of a wave of consolidation and partnering in the industry.

The Journal quoted unnamed sources as saying that ADM had made the approach and that details were unclear.

White Plains, New York-based Bunge operates in more than 40 countries and is Brazil's largest exporter of agricultural products, while Chicago-based ADM says it has customers in 160 countries.

The scale of a deal between ADM and Bunge would raise bigger regulatory concerns than if Glencore acquired Bunge, said a grain trading source. Big asset divestments would be necessary to clear regulators in areas such as combining oilseed crushing operations, the source said.

“That’s like New York buying Chicago to me. You buy a whole basket of goodies and then start dismantling,” the person said.

A second grain trading source said there is so much overlap of oilseed crushing assets between the two companies that the deal looks defensive – a way to keep Glencore from acquiring Bunge. Still, it would shore up ADM’s assets in South America, the trader said.

Bunge rebuffed Glencore last year, and the two struck an agreement that temporarily prevents Glencore from making a hostile bid, according to news media reports.

Large grain traders have struggled in recent years with the global oversupply and thin trading margins have squeezed their core commodity trading operations, including those of Bunge, ADM, Cargill and Louis Dreyfus. Together the four are known as "ABCD."

Shares of Bunge, which has a market cap of $9.79-billion, closed up 11% at $77.56 on Friday.

ADM has a market capitalisation of $22.64-billion, while Bunge's market cap stands around $10-billion.

Illinois farmer Dan Henebry, who delivers corn and soybeans to ADM's North American headquarters in Decatur, Illinois, said he was worried a takeover of Bunge could lead to grain handlers paying farmers less for their crops.

"I'm sure it's going to make them bigger and more competitive, but I don't know if it's going to improve the bid to the farmer," he said.

The farm sector has already undergone a frenzy of mergers between the biggest seed and chemical companies, including last year's combination of Dow and DuPont.

"We've had so many mergers," Henebry said. "Less competition is not good."

Edited by Creamer Media Reporter

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
John Thompson
John Thompson

John Thompson, the leader in energy and environmental solutions through value engineering and innovation, provides the following: design, engineer,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (15/03/2024)
15th March 2024 By: Martin Creamer
Gold, hydrogen, mining boost make headlines
Gold, hydrogen, mining boost make headlines
15th March 2024
Magazine round up | 15 March 2024
Magazine round up | 15 March 2024
15th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.14 0.169s - 90pq - 2rq
Subscribe Now