Glencore explores possible takeover of Bunge in agricultural commodity trading

PUBLISHED : Wednesday, 24 May, 2017, 3:55am
UPDATED : Wednesday, 24 May, 2017, 3:55am

Glencore said on Tuesday its agricultural unit has made an informal approach to commodities trader Bunge about a “possible consensual business combination,” the company said in a statement.

The company did not say more about a potential offer that its Glencore Agriculture Ltd unit made to Bunge. Glencore also said “discussions may or may not materialise and there is no certainty that any transaction will occur.”

Shares of Bunge surged earlier on Tuesday after the Wall Street Journal reported that commodities trader Glencore has approached the US agribusiness group about a takeover.

It was unclear where discussions between the companies stand and there may not be any deal.

Bunge declined to comment.

The report comes amid heightened expectations of consolidation among large grain traders as a global oversupply and thin trading margins have squeezed the core grain trading operations of Bunge and rivals Archer Daniels Midland, Cargill and Louis Dreyfus.

Bunge Chief Executive Officer Soren Schroder said earlier this month that the sector was ripe for consolidation and that Bunge is prepared to take the lead in any deal-making.

Bunge had a market capitalization of US$9.84 billion at Monday’s close. Shares jumped as much as 17.6 per cent to a 2-1/2-month high, and were up 16 per cent, the biggest share gain in more than eight years, at US$81.28.

A deal would make Glencore, the Swiss mining and trading giant, a major player in the US agriculture market.