The transaction creates a dominant North American company, with the Canada Pension Plan Investment holding a 12% stake in the combined operation
, and the companies confirmed the transaction Tuesday. St. Louis-based Bunge is paying US$8.2-billion in shares and cash, with US$6.2-billion in stock and $2-billion in cash.
Bunge currently generates 51 per cent of its earnings from processing agricultural commodities, while Viterra makes 65 per cent of its own from merchandising and handling. Combined, the two companies will make 41 per cent of their earnings from processing and 33 per cent from merchandising and handling.
However, S&P noted earlier this year that Viterra’s earnings “will likely normalize away from the very favorable market conditions in 2022 at a lower level in the next 12-24 months.” Glencore originally acquired Viterra for $6.1-billion in 2012, then sold large stakes in its broader agriculture division to pension funds Canadian Pension Plan Investment Board and British Columbia Investment Management Corporation in 2016 because it needed to repay debt. CPPIB paid US$2.5-billion for its stake.
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