BARR, SWITZERLAND — Glencore P.L.C., the Switzerland-based miner and commodities trader, has made a takeover approach for U.S. grain trader Bunge Ltd.
Shares of the White Plains, N.Y.-based company soared by as much as 17% on May 23, minutes after news of Glencore’s takeover approach was reported, the biggest intraday jump for the company in nine years.
Glencore released a statement after reports had surfaced of the takeover approach that said: “Glencore notes recent media speculation regarding an approach by Glencore to Bunge Limited. Glencore confirms that Glencore Agriculture Limited (Glencore’s non-consolidated agriculture joint venture) has made an informal approach to Bunge Limited regarding a possible consensual business combination. Following the informal approach from Glencore Agriculture Limited, discussion may or may not materialize and there is no certainty that any transaction will occur.”
In response to Glencore’s statement, Bunge issued its own press release stating that it is “not engaged in business combination discussions with Glencore Agriculture Limited or Glencore P.L.C.” The company added that it was “committed to continuing to execute its global agri-foods strategy and pursuing opportunities for driving growth and value creation.”
During a Feb. 23 earnings call, Ivan Glasenberg, chief executive officer of Glencore, said the company was ready to focus on regrowth in the agricultural sector. During the past several years, Glencore had sold assets, including 50% of its agricultural segment, and reduced its debt by millions of dollars.
|Ivan Glasenberg, c.e.o. of Glencore|
“It was a shrink to grow,” Mr. Glasenberg said during the conference call. “Yes, ag is a smaller part of our business, because now we’re only equity count 50% of it. But the idea of selling 50% was the reason that we did. It was to set up a structure where we can grow.”
He then mentioned that it planned to obtain infrastructure in areas of the world that the company does not have strong footprint, including the United States.
“We need to get bigger in the United States,” he said. “It’s a part of the business we miss. We don’t have infrastructure in the United States in the ag part of the business. We need infrastructure. Infrastructure is the key to the business. You can’t trade in the ag space without big infrastructure. So we need to buy infrastructure. We need to definitely grow South America and the United States a bit more.”
In 2012, Glencore bought Canadian grain merchant Viterra Inc. for $4.8 billion.
Glencore is one of the world’s two biggest wheat traders, handling 18% of the world’s seaborne trade, and is one of the top three in Russia, Canada, Australia and the E.U. The group is vying for a position among the world’s biggest “ABCD” commodity traders — Archer Daniels Midland Co., Bunge, Cargill, and Louis Dreyfus Commodities BV.
Bunge, which has more than 400 facilities in more than 40 countries worldwide, has a market value of more than $11 billion. It reported net sales in 2016 of $42.9 billion, down slightly from $43.4 billion in 2015.
Glencore is scheduled to hold its annual shareholders meeting on May 24, while Bunge’s annual shareholders meeting is set for May 25.