Leading crop merchant Bunge (NYSE:BG) is reportedly in talks with rival global grain trader Viterra about a potential merger. BG shares surged 3.5% on Thursday in reaction to the news, which was first reported by Bloomberg. Viterra is partly owned by Glencore Plc (GB:GLEN).
The companies are negotiating the structure of a potential deal, with one option being a stock deal where Bunge shareholders would own a majority of the combined entity. Sources cautioned that the structure of the deal could change or talks could end without any deal. It is interesting to note that Glencore had approached Bunge for a friendly takeover in 2017, which was denied by the U.S. agri giant.
After struggling for years, Bunge and other commodity merchants delivered strong performance last year, as the disruption caused by the Russia-Ukraine war impacted supply and boosted crop prices.
A merger with Bunge would place Viterra among the top global grain merchants. It would give Viterra access to export terminals in the U.S., a country which ranks among the leading grain producers. Last year, Viterra bought U.S.-based Gavilon for $1.1 billion.
What is the Price Target for Bunge?
Wall Street’s Moderate Buy consensus rating on Bunge stock is based on four Buys and two Holds. The average price target of $120.50 implies nearly 29% upside. Shares have declined 6% year-to-date.
