Bunge-Viterra Merger Cleared in Brazil, pending Canada’s Approval

Bunge-Viterra Merger Cleared in Brazil, pending Canada’s Approval
Photo: unsplash.com 15.05.2024 558

After 11 months of analysis, CADE approved the merger between the two companies; industry representatives see little impact on the local commodities market.

After nearly 11 months of analysis, the Administrative Council of Economic Defense (CADE) in Brazil has approved the merger between multinationals Bunge and Viterra. The agency’s decision was published on Monday (13) in the Federal Official Gazette. Valued at $8.2 billion, the deal is expected to heighten the competition for leadership in the global food and agricultural commodities market, where both companies are major players. Among them, Bunge has a more significant presence in Brazil, being the country’s largest buyer and processor of soybeans.

The approval in Brazil, a key market for the two agribusiness giants, was crucial for both companies’ ambitions. However, before finalizing the transaction, they must clear additional regulatory hurdles. For instance, Canada’s antitrust agency recently expressed concerns that the merger could significantly reduce competition, particularly in grain purchasing and canola oil trading. Canada, where Viterra originated, harvested over 90 million tonnes of grain in the 2022/23 crop year. According to the Canadian Competition Bureau’s April 23 opinion, the merger poses a risk due to Bunge’s dominance in oilseed crushing and Viterra’s extensive grain storage facilities in Western Canada, a region that accounts for about 60% of the country’s grain production.

Competition Bureau Canada also noted that the merger could affect G3, one of Viterra’s main competitors in the grain storage business, in which Bunge holds a minority stake. Together, the three companies control a third of Western Canada’s storage capacity. The agency has forwarded its observations to the country’s Ministry of Transport, which has until June 2 to review the findings.

Viterra and Bunge have reiterated their expectation to conclude the deal by mid-year. 

“We are pleased with the progress of the regulatory process and are confident that the transaction will bring substantial benefits to Canada,” 

they stated.

Greg Heckman, CEO of Bunge, echoed this optimism, suggesting that if antitrust agencies require divestitures to approve the merger, there would be a “robust” market demand for the company’s assets. Speaking at a Reuters event in Minnesota in November, he mentioned that Bunge would be prepared to negotiate these assets “at a very fair value.”

In Brazil, the CADE did not stipulate the sale of any assets for the deal’s approval. Industry sources believe the merger will have minimal impact on Brazil’s commodities shipping operations and the domestic grain market. Within the industry, there is a view that the merger could make Bunge even more competitive in the commodities business, enhancing its already “verticalized” operations. Viterra’s structure in Brazil includes a wheat mill and partnerships such as Tegram in Itaqui (state of Maranhão), along with involvement in the sugar cane sector.

The approval did not go unnoticed in the sector. 

“Whenever two large companies merge, there is concern because the merger means one fewer competitor. The sector prefers to have more companies operational,” 

commented Glauber Silveira, executive director of the Brazilian Corn and Sorghum Producers Association (Abramilho) and former president of the Brazilian Soybean Producers Association (Aprosoja Brasil).

Source: Valor International

agricultural markets  Brazil 

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