The proposed merger of Bunge (NYSE:BG), a global agribusiness and food company, with privately held Viterra may encounter challenges in terms of antitrust regulations. The business combination was announced last week and is projected to close in mid-2024.
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Bunge’s Viterra Deal Faces Potential Hurdles
The deal will create an agribusiness powerhouse, which could hurt competition, a Wall Street Journal report highlighted. Lack of competition could leave farmers with fewer options for selling their crops, driving up food prices.
Per the report, Farm Action, a group that fights against monopolistic corporate control over the food and agriculture systems, will urge the antitrust authorities to block the proposed deal.
In a tweet, Farm Action said the deal would reduce competition, which is bad news for farmers. Echoing similar concerns, the director of food policy for the Consumer Federation of America, Thomas Gremillion, also believes that the merger could harm farmers and competition.
Besides for the U.S., the deal will also require regulatory approvals in international markets, including Canada and Argentina. Both Bunge and Viterra have substantial operations and a strong presence in South America, particularly in countries such as Brazil and Argentina.
Whether the merger faces antitrust challenges or not remains a wait-and-see story. Meanwhile, Goldman Sachs analyst Adam Samuelson is upbeat about the deal and expects “sizable synergy potential” from the combined company.
Analyst Weighs In
Samuelson sees “strategic merit” in the merger. The analyst believes that both companies have complementary footprints across the agricultural value chain, and the business combination will drive earnings and cash flow resilience.
The analyst added that the business combination would strengthen the company’s competitive positioning against regional players. Samuelson is bullish about BG stock and recommends a price target of $161, representing an upside potential of about 67% from current levels.
Is Bunge a Good Stock to Buy?
Bunge stock has received a Strong Buy rating consensus, based on three Buy and one Hold, from the Top Wall Street analysts. Further, these analysts’ average price target of $121.25 implies 25.74% upside potential from current levels.
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