Bunge Is Open to Talks With Glencore, ADM as CEO to Leave

Bunge is an American agribusiness and food company, headquartered in White Plains, New York. It's also a soybean exporter and grain trader. ( Company logo )

(Bloomberg) -- Bunge Ltd. will announce as soon as Monday the departure of its chief executive officer, removing a hurdle to further talks with would-be buyers, said a person familiar with the matter.

The imminent exit of CEO Soren Schroder, who had resisted approaches by suitors including Glencore Plc, comes little more than a month after the agricultural trading house reached an agreement with activist investors seeking to improve performance, the person said, asking not to be named ahead of an announcement. Bunge declined to comment.

Bunge, which has struggled to navigate a years-long agricultural downturn and more recently a trade war between the U.S. and China, is open to reengaging with both Glencore and Archer-Daniels-Midland Co., the person said.

ADM and a unit of Glencore held merger talks with Bunge in 2017 and earlier this year without reaching a deal. While Bunge isn’t actively seeking new talks, the fact that it doesn’t plan to appoint a new permanent CEO immediately creates an opportunity for rivals to re-approach the 200-year-old firm, the person said.

Both Glencore and ADM declined to comment.

On Friday, the Wall Street Journal reported plans to oust Schroder. Bunge intends to search inside and outside the company for a replacement in a process that doesn’t have a fixed deadline, the person said.

Little known outside the agribusiness industry, Bunge is the “B” of the four storied “ABCD” group of companies that have dominated agriculture for more than a century. ADM, Cargill Inc. and Louis Dreyfus Co. round out the quartet, known for the initials of each company. A deal involving Bunge would likely give the quartet the biggest shake-up in a generation.

Bunge is worth $8.3 billion, about half its peak valuation in 2008. ADM is worth $25 billion. Glencore hasn’t revealed the valuation of its agriculture unit since it sold a 49 percent stake in 2016 to two Canadian pension funds for $3.1 billion.

In late October, Bunge reached an agreement with D.E. Shaw & Co and Continental Grain Co. to bring in new directors and start a strategic review, often the precursor to a sale. Bunge, based in White Plains, a commuter town north of New York City, has been the subject of takeover speculation in the past 18 months. The trade war has placed soybeans, its main product, in the cross-hairs.

Bunge put Continental CEO Paul Fribourg in charge of the review. The strategic committee has a mandate to look for "potential material mergers, acquisitions, divestitures and other key strategic transactions," according to its charter, filed with U.S. regulators.

At the time, Schroder said in an interview that the committee would analyze the “whole ball of wax", adding that Bunge was open, particularly in grain handling, to finding ways to collaborate and create joint ventures.

“Challenges remain in certain parts of the business,” Schroder, who’s been CEO since mid-2013, said at the time. “They are structural, they are in the sector, and we have to find a way to address those.”

Bunge shareholders have a pretty good idea of what could be coming.

"Is the company for sale?," one Wall Street analyst asked on the third-quarter earnings conference call. Schroder replied, the committee "will have a fresh look at everything."

 

©2018 Bloomberg L.P.

Comments