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ADM seeks to merge with Bunge

An ADM merger with Bunge would probably face significant antitrust hurdles in the U.S.

by Javier Blas and Simon Casey

Archer-Daniels-Midland Co. sought merger talks with Bunge Ltd., said a person briefed on the matter, potentially setting up a battle for control of the giant agricultural trader with Glencore Plc. 

ADM’s recent approach was preliminary and it’s unclear whether a deal can be done, said the person, who asked not to be identified because the talks are private. Glencore, the world’s largest commodities trader, approached Bunge last year over a merger, but was rebuffed and signed a standstill agreement that prevents it making a hostile bid for the time being.

Bunge is the B in the so-called ABCD companies that dominate global agricultural trade, alongside ADM, Cargill Inc. and Louis Dreyfus Co. After several years of bumper crops, trading profits have fallen, prompting industry executives to talk of consolidation.

ADM and Glencore declined to comment. Bunge did not respond to messages seeking comment. 

Bunge shares rose 11% on Friday, the most since May, after the merger talks were first reported by The Wall Street Journal. That raised its market value to almost $11 billion, compared with close to $23 billion for ADM.

ADM and Glencore previously sparred in 2012, when they both sought to buy Canadian grain trader Viterra. Glencore won, paying C$6.1 billion ($4.8 billion), and subsequently sold a large chunk of the company to several others, keeping for itself the trading business.

An ADM merger with Bunge would probably face significant antitrust hurdles in the U.S. The Chicago-based firm could need to find a partner to take some of Bunge’s North American grain silos and processing plants. 

Bunge, based in the outskirts of New York, has struggled over the last year and a half. It cut profit guidance several times as large surpluses of wheat, corn and soybean reduced trading opportunities. Soren Schroder, Bunge’s chief executive officer, said in July that clear overcapacity in the industry meant there was a need for consolidation. 

Peter Grauer, the chairman of Bloomberg LP, the parent of Bloomberg News, is a senior independent non-executive director of Glencore.

To contact the reporters on this story: Javier Blas in London at [email protected]; Simon Casey in New York at [email protected]

To contact the editors responsible for this story: James Herron at [email protected]

Nicholas Larkin

© 2018 Bloomberg L.P

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