United States grains merchants Bunge and Glencore-backed Viterra are merging to create an agricultural trading giant worth about $34bn including debt, the companies have said, in a deal that will likely draw close regulatory scrutiny.
The deal, announced on Tuesday, brings the combined company closer in global scale to leading rivals Archer-Daniels-Midland and Cargill. It values Bunge and Viterra at about $17bn each. Bunge shareholders, however, will own about 70 percent of the company because Bunge will pay for a significant chunk of the deal with cash.
The deal is unprecedented in size in the global agriculture sector. It comes after Bunge posted record adjusted profits in 2022, benefitted from tight global grain supplies due to Russia’s war on Ukraine.
Bunge shares rose by more than 2 percent.
Under the deal, Viterra shareholders will get about 65.6 million shares of Bunge stock, carrying a value of about $6.2bn, and about $2bn in cash.
Bunge will also assume $9.8bn of Viterra’s debt, according to a joint statement.
Viterra shareholders will own 30 percent of the combined company following the deal’s expected close in mid-2024.
“The companies are highly complementary,” Bunge CEO Greg Heckman told the Reuters news agency. “The way the assets and teams fit together, the strategic merit is one that we’ve looked at for years … Things just finally aligned.”
Bunge is already the world’s largest oilseed processor and analysts say it and Viterra’s crushing businesses could face regulatory scrutiny in Canada, Argentina and elsewhere.
Canada’s antitrust regulator will review the planned merger, a spokesperson for the regulator said in a statement. Argentina’s competition bureau has not yet received formal notification of the merger, a government source said.
The US Department of Justice and antitrust regulators in the European Union did not respond to requests for comment.
Last year, Bunge was the largest corn and soybean exporter from Brazil, the world’s top source of the staple crops for making animal feed and biofuels, according to data from shipping agent Cargonave. Viterra was the third-largest corn exporter and seventh soybean shipper.
In the US, Viterra’s business of buying and selling grain expanded via its purchase of Gavilon last year. The merger will enhance Bunge’s grain exporting and oilseed processing businesses in the US, the world’s second-largest corn and soy exporter, where it has a smaller presence than ADM and Cargill.
The deal also expands Bunge’s physical grain storage and handling capacity in major wheat exporter Australia. The company currently operates just two grain elevators and a port terminal in the western part of the country. Viterra has 55 storage sites in South Australia and Victoria and six bulk grain export terminals.
Sustained annual earnings of $4bn are “a very reasonable target” for the company after the merger, John Neppl, Bunge’s chief financial officer, told Reuters.
Reduced competition
Bunge’s management team, led by CEO Heckman who took the top role in 2019 when the company itself was a takeover target, will oversee the combined entity.
Heckman oversaw a portfolio review that led Bunge to scale back or sell underperforming operations such as South American sugar and Mexican wheat milling and invest in its core edible oils business. The company reported record earnings last year after a string of quarterly losses in 2018. Heckman previously led Gavilon from 2008 to 2015.
The Consumer Federation of America said the deal would reduce competition for farmers’ crops and consolidate processing of oilseeds used to make plant-based foods as well as biofuel at a time the White House is broadly trying to promote competition in the economy.
“Further concentration seems likely to harm consumers and the businesses, like plant-based food manufacturers, that rely on these commodities,” said Thomas Gremillion, director of food policy for the Federation.
Bunge said it plans to repurchase $2bn of its stock to enhance accretion from the deal to adjusted profit. The deal is being backed by a financing commitment of $7bn from Sumitomo Mitsui Banking Corporation (SMBC).
Canada Pension Plan Investment Board (CPPIB) and British Columbia Investment Management Corp said they have agreed to support the deal, indicating that all Viterra shareholders are on board. CPPIB said it would own 12 percent of the combined company.
In Ukraine, the world’s top sunflower producer and largest supplier of sunflower oil, a combined Bunge-Viterra would have three oilseed processing plants across the country’s south and east – in Kharkiv, Dnipro and Mykolaiv.
Acquiring Viterra would bring Bunge’s revenue, which was $67.2bn in 2022, more in line with that of ADM, which registered sales of nearly $102bn last year.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
