Canada approves Bunge-Viterra merger worth $34 billion with conditions
Canada approved Bunge's $34 Billion merger with Glencore-backed Viterra on Tuesday, subject to conditions. This was the last remaining obstacle for an unprecedented global agricultural tie-up.
According to a release from the Transport Ministry, the conditions of the approval are Bunge's divestiture six grain elevators located in Western Canada as well as a binding Bunge commitment to invest C$520,000,000 ($362,000,000) in Canada over the next five-year period.
According to the ministry, approval requires that Bunge's minor stake in Saudi grain company G3 be subjected to strict and legally-binding controls. This is done so Bunge can't influence G3's investment or pricing decisions. Bunge, Viterra, and G3 together account for one third of Western Canada's capacity in elevators.
The merger, announced in 2023, would create a global crops trading and processing giant worth $34 billion including debt, closer in scale with chief rivals Archer-Daniels-Midland Co and Cargill Inc.
Bunge stated in a press release that "with the Canadian approval we are close to completion of the regulatory processes and expect to be closed in early 2025."
Shareholders approved the deal which would allow the combined company to better capitalize on the anticipated increase in demand for canola and soybean oil in order to produce biofuels over the coming years. However, more consolidation within the industry will leave farmers with fewer customers for their crops.
The Canadian antitrust watchdog raised concerns about the deal in April. In a nonbinding report, it said that the transaction would likely harm competition in Western Canada for grain purchases, as well for the sale of canola oil to Eastern Canada.
The Transport Ministry said that its conditions addressed concerns raised during public interest assessment.
Greg Heckman, CEO of Bunge, had stated that he didn't see the need for remedies to be implemented in Canada.
The Transport Minister, in clearing the deal with the buyer, required that a price-protection program be set up for certain buyers of canola oils from Central and Atlantic Canada. This will ensure fair pricing and the stability of the market.
Anita Anand, Transport Minister, said in a statement that "this decision highlights the importance of promoting the economic growth in Canada while maintaining a robust oversight to protect the competition and the public's interest." (1 Canadian dollar = 1.4355 dollars) (Reporting from Ismail Shakil, Ottawa; additional reporting from Tom Polansek, Chicago; editing by Chris Reese & Sonali Paul).
(source: Reuters)
