Glencore Makes Informal Takeover Approach to Bunge

(New York Times) – Glencore, the mining and energy giant, said Tuesday that its agriculture business had made an informal takeover approach to the commodity company Bunge Limited.

The talks are at a very early stage and may not result in a deal. If it is consummated, the transaction will make Glencore a large player in the United States market for buying and selling agriculture commodities, namely grain.

Glencore, which is based in Baar, Switzerland, said that its agriculture joint venture, Glencore Agriculture Limited, had approached Bunge “regarding a possible consensual business combination.”

“Discussions may or may not materialize, and there is no certainty that any transaction will occur,” Glencore said in a news release on Tuesday.

A spokeswoman for Bunge was not immediately available to comment on Tuesday.

The Wall Street Journal reported earlier Tuesday that Glencore had made an approach to Bunge.

Such a deal would add to the consolidation reshaping big agricultural companies. China National Chemical Corporation is closing in on a $43 billion takeover of Sygenta, the Swiss farm chemical and seed company. Dow Chemicals and DuPont, which both have big agricultural businesses, are working to close their merger. And Bayer AG, the German industrial conglomerate, is trying to complete a multibillion-dollar takeover of Monsanto, the company closely associated with the rise of genetically modified foods.

Bunge, which is based in White Plains, was worth about $10 billion, based on its market capitalization, ahead of trading on Tuesday. News of the potential talks sent Bunge shares up more than 16 percent in afternoon trading in New York on Tuesday.

Founded in 1818, Bunge is one of four companies that dominate the trading of agriculture products, along with Archer Daniels Midland, Cargill and Louis Dreyfus. The four companies are known as the ABCD companies in agriculture.

Bunge had net sales of $42.7 billion last year and employed more than 30,000 people in 40 countries worldwide.

Glencore, led by the chief executive Ivan Glasenberg, has long sought to expand its agriculture reach.

The company sold a 49.9 percent stake in its agriculture business to two Canadian pension funds for more than $3 billion last year, in hopes of enhancing the stand-alone business’s ability to pursue acquisitions.

The sale came after Glencore suffered a $5 billion annual loss in 2015 as global commodities prices slumped, particularly in the mining and oil industries. Glencore has a long history of striking transformative deals, none bigger than its $30 billion merger with its rival Xstrata in 2013.

In December, Glencore agreed to help buy nearly 20% of Russia’s state oil company, Rosneft, for some $11.3 billion.

Glencore Agriculture has operations in more than 35 countries worldwide, including 274 storage facilities, 36 processing facilities and 23 ports, according to the company’s website. It originates, processes and markets a variety of agricultural commodities, including grain, oilseeds and sugar.

The agriculture business segment reported revenue of $21.9 billion in 2016, accounting for about 14 percent of Glencore’s overall revenue last year.

As a whole, Glencore reported $152.9 in revenue last year, with 155,000 employees worldwide.

Shares of Glencore closed down 1.2 percent in London on Tuesday.