Takeover Talks Between ADM, Bunge Have Stalled, Sources Say -- Update
09 Março 2018 - 1:45PM
Dow Jones News
By Jacob Bunge and Dana Mattioli
Takeover talks between Bunge Ltd. and Archer Daniels Midland Co.
have stalled, people familiar with the matter said, throwing into
question a combination that could have formed one of the world's
largest agricultural conglomerates.
The two companies, among the largest global traders and
processors of farm commodities, have been unable to reach an
agreement despite more than a month of negotiations, the people
said. The Wall Street Journal reported in January that ADM had
approached Bunge about a takeover of the company that would vastly
expand ADM's reach into South American grain markets and boost its
soybean-processing capabilities.
The talks had already been moving at a slow pace as the
companies discussed ways to resolve potential pushback from
antitrust and other authorities, the people said.
It isn't clear whether the talks will pick up again.
The development could ratchet up pressure on Bunge's management
to explore other ways to boost its value, or find a different deal,
as the agriculture industry remains under pressure from a global
glut of crops. The White Plains, N.Y., company in February reported
its net income in 2017 dropped to $160 million from $745 million,
and Bunge last year unveiled a restructuring plan to cut $250
million in annual expenses by 2020.
Continental Grain Co., an investment firm that owns about 1.2%
of Bunge's shares, on Monday won U.S. approval to purchase more
stock, a sign it intends to push management to find a deal or
another way to create value. Continental five years ago pushed for
change at U.S. pork giant Smithfield Foods Inc., which eventually
sold itself to a Chinese meat company.
Adding to the pressure on Bunge, its shares had climbed 11%
since the ADM deal discussions surfaced. ADM's shares gained about
8%, signaling that its shareholders also like the prospect of a
deal.
But signs have emerged in recent weeks that business for Bunge
and other crop processors could improve. Dry weather in Argentina
is expected to damage that country's soybean crop, which analysts
see as slowing global supply growth and improving profit margins
for companies such as Bunge, the world's largest processor of
soybeans.
The stalled talks between ADM and Bunge could provide an opening
for mining conglomerate Glencore PLC, which operates an
agricultural trading division that Chief Executive Ivan Glasenberg
has been eager to expand. Glencore last May confirmed it had
approached Bunge about a deal after the Journal broke the news of
the move.
Mr. Glasenberg recently said that an agreement by Glencore not
to make a hostile bid for Bunge had expired, though he didn't
comment on whether Glencore would re-engage with the company.
Mr. Glasenberg has been closely monitoring Bunge and ADM since
news of their negotiations broke, people familiar with the matter
have said.
Glencore hadn't made a renewed approach, they added.
ADM's interest in acquiring Bunge, one of its oldest and largest
competitors, represented a potential strategic shift for the
Chicago-based grain giant. Over the last five years, ADM has spent
billions of dollars acquiring smaller companies focused on
flavorings and specialty ingredients to build a business that could
be more profitable and less volatile than buying and trading
commodity crops such as corn and soybeans.
Purchasing Bunge would have marked a shift given its big
presence in commodity trading. However, some ADM investors were
drawn to the potential for cutting costs and running Bunge's
operations more profitably.
Write to Jacob Bunge at jacob.bunge@wsj.com and Dana Mattioli at
dana.mattioli@wsj.com
(END) Dow Jones Newswires
March 09, 2018 11:30 ET (16:30 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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