Bunge Overcomes Final Regulatory Hurdle to Viterra Merger

Bunge Global S.A. BG, a leading integrated agribusiness firm, has announced that it is set to close in on its $34 billion merger with Viterra Ltd., after clearing the last major roadblock in the way of the deal. Bunge has received the regulatory approvals from China for this merger, which was announced nearly two years back. The merger is expected to be concluded on or around July 2, per a statement by BG.

A Landmark Deal in Global Agribusiness

The deal between Bunge Global and Glencore plc-backed Viterra is expected to be the largest merger among agriculture firms globally, by value. Bunge shares have soared almost 6% since Friday. The combination of the two agriculture firms is anticipated to create one of the largest crop trading and processing companies globally, on par with competitors such as Cargill.

Regulatory Challenges and Global Scrutiny

The deal faced several setbacks, including regulatory challenges and concerns over competition in the global market, resulting in delays. The merger is expected to reduce competition in the agricultural sector, which would directly affect farmers and their ability to sell their produce at competitive prices. The approval from Chinese regulatory authorities was the last hurdle to closing this deal. The company had been actively working to secure other necessary approvals, including regulatory approvals from Canada, the European Union and other markets.

Expanded Global Reach in Key Markets

Bunge believes that the merger with Viterra is a strategic fit for the company, which should bolster its position in grain exports and oilseed processing in the United States. The company currently falls behind its competitors in the U.S. market. However, the merger is expected to create a leading agribusiness giant that positions it in line with its competitors. Furthermore, this enables Bunge to increase its export capabilities and physical grain storage and handling capacity in Australia and Canada, two of the largest wheat suppliers globally.

Market Headwinds

BG and many of its competitors have witnessed declining profits in recent quarters due to sluggish demand and an oversupply of crops that these companies trade, store, and process into final products like food and biofuel feedstock. Bunge also noted that the global uncertainty surrounding trade policies and tariffs is anticipated to negatively impact the outlook for its agribusiness unit. 

BG’s Zacks Rank & Key Picks

BG currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Flotek Industries Inc. FTK, Oceaneering International OII and RPC, Inc. RES, each carryinga Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Flotek Industries specializes in green chemistry, which provides innovative solutions aimed at reducing the environmental impact of the energy industry. Flotek develops specialty chemicals tailored for both domestic and international energy producers, as well as oilfield service companies. These chemicals not only help reduce the environmental impact of hydrocarbon production but also lower operational costs.

Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. The company is a leading offshore equipment and technology solutions provider to the energy industry. OII’s proven ability to deliver innovative, integrated solutions supports ongoing client retention and new business opportunities, ensuring steady revenue growth.

RPC generates strong and stable revenues through a diverse range of oilfield services, including pressure pumping, coiled tubing and rental tools. The company is strongly committed to returning value to its shareholders through consistent dividend payments and share buybacks, making it an attractive choice for investors seeking steady returns.

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This article originally published on Zacks Investment Research (zacks.com).

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