Bunge Denies Merger Talk With Glencore


News that Glencore Agriculture Ltd, jointly owned by Glencore and two Canadian pension funds, approached Bunge sparked the US agribusiness' sharpest rally in more than eight years on Tuesday. Shares jumped as much as 17.6 percent to a 2-1/2-month high, and were up 16 percent, the biggest share gain in more than eight years, at $81.28 at midafternoon.

Glencore stock fell 1.1 percent to 288.85 pence by 8:07 a.m.in London, valuing the company at about $54 billion.

Bunge is one of the biggest producers and processors of agribusiness commodities including soybeans, corn and bioenergy.

Glencore already has experience in the industry. The move by Glencore signals that it has moved past the solvency questions it faced two years ago.

Shares in Bunge jumped almost $10 on the New York Stock Exchange during Tuesday's session, when news of Glencore's approach was revealed. The deal would also mean a sea change in an industry that for the past century has been dominated by the so-called ABCD quartet of Archer-Daniels-Midland Co., Bunge, Cargill Inc. and Louis Dreyfus Co.

Yesterday saw Glencore officially verify it had contacted the NY listed grain trader in relation to kick-starting discussions about a takeover.

Glencore may have to pay more than $100 per share to buy Bunge, Vertical Research said in a report. "I am not surprised".

Merger expectations have been bubbling in the sector for months as commodities prices remain stubbornly low. Hong Kong-based WH Group now owns Smithfield. "It's more digestable than some of the other properties out there".

The topic of a takeover bid is sure to be a hot topic of discussion at annual shareholder meetings for the companies, both scheduled later this week.

In 2012, Glencore bought Canadian grain merchant Viterra Inc. for $4.8 billion.

Including debt, its so-called enterprise value was about $15 billion.

Almost a year ago, it sold a 40 per cent stake in the unit to the Canada Pension Plan Investment Board, for $US2.5 billion. Ratings agencies have since upgraded Glencore and analysts say its balance sheet is now strong.

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