Equities

Bunge's $8B Viterra Deal Risks Delays Amid Antitrust Woes

Bunge's $8B Viterra Deal Faces Delays Due to Regulatory Approvals in Canada, China, and EU

By Mackenzie Crow

7/11, 13:59 EDT
Bunge Limited Bunge Limited
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Key Takeaway

  • Bunge's $8 billion acquisition of Viterra faces potential delays due to pending regulatory approvals in Canada, China, and the EU.
  • Shares of Bunge fell 1.8% following news of possible delays, despite initial confidence from analysts and company reassurances.
  • Antitrust concerns are central to the delay, with Canada's watchdog citing "substantial anti-competitive effects" and the EU setting a deadline for remedies.

Deal Faces Regulatory Delays

Bunge Global SA's $8 billion acquisition of Glencore Plc-backed Viterra is encountering potential delays due to pending approvals from regulatory bodies in Canada, China, and the European Union. The transaction, initially targeted for completion by mid-2024, is now more likely to be finalized by the end of the year, according to sources familiar with the matter. These sources, who requested anonymity due to the private nature of the information, indicated that Bunge had aimed to close the deal by the end of August. Despite these challenges, Bunge has communicated to its employees that the acquisition remains on track to meet the original deadline.

Shares of Bunge fell by as much as 1.8% in New York following the news, reversing earlier gains. Bunge declined to comment on the matter. In June, Andrew Strelzik, an analyst at BMO Capital Markets, expressed confidence in the deal's progress, stating that Bunge appeared "comfortable with progress toward closing to-date" after meetings with Bunge's investor relations team members Ruth Ann Wisener and Mark Haden.

Antitrust Concerns

The delays are primarily attributed to antitrust concerns raised by various countries. Canada's antitrust watchdog has expressed that the deal could have "substantial anti-competitive effects" on agricultural markets. Similarly, the European Union has early-stage concerns about potential antitrust issues in certain central European grain markets. The EU has set an initial deadline of midnight Thursday, Brussels time, for Bunge to submit remedies, which could extend the review process by an additional 10 days. If the concerns are not adequately addressed, regulators may decide to escalate their investigation further.

China, the world's largest commodities buyer and top importer of soybeans, has yet to issue an opinion on the deal. Although there is no concern about business overlap in China, the country has a history of demanding concessions in similar transactions. For instance, when Glencore acquired Xstrata, it had to sell a copper mine in Peru to satisfy Chinese demands. A similar scenario could unfold with Bunge's acquisition of Viterra.

CEO's Reassurances

In an effort to address these concerns, Bunge CEO Greg Heckman published an opinion piece in a Canadian trade publication. He emphasized that the deal would benefit Canada and assured that no facilities in the country would be closed as a result of the merger. Heckman also disagreed with a March 27 report that raised concerns about Bunge's stake in G3, a joint venture between Bunge and the Saudi Agricultural & Livestock Investment Co. "The truth is, G3 and Viterra are competitors today and G3 will be a strong competitor to a combined Bunge-Viterra after the merger," Heckman wrote.

Street Views

  • Andrew Strelzik, BMO Capital Markets (Neutral on Bunge and Viterra deal):

    "The deal appeared to be on track and that Bunge remained comfortable with progress toward closing to-date."

Management Quotes

  • Greg Heckman, CEO of Bunge:

    "The deal would be good for Canada and would not result in the closure of any facilities in the country. The truth is, G3 and Viterra are competitors today and G3 will be a strong competitor to a combined Bunge-Viterra after the merger."