Bunge touches 22-month high as consolidation talk swirls

CHICAGO May 24 Shares of Bunge Ltd
touched a 22-month high on Wednesday, signaling investors’ hopes
for consolidation in the commodities sector even after the U.S.
agribusiness said it was not in M&A talks with the agricultural
unit of Glencore Plc.

Bunge shares were trading slightly higher at midmorning at
$81.97 after earlier touching a peak of $82.66, the highest
since July 2015. Glencore shares slipped 0.1 percent to 291.75
pence.

News that Glencore Agriculture Ltd, a joint venture owned by
Glencore and two Canadian pension funds, had informally
approached Bunge about a “possible consensual business
combination” sparked Bunge’s sharpest rally in more than eight
years on Tuesday.

Merger expectations have been swirling around large grain
traders for months following a string of poor earnings results
and Bunge’s Chief Executive Officer Soren Schroder said earlier
this month that the White Plains, New York-based company was
prepared to take the lead in any dealmaking.

Low commodity prices and a global glut of grain have
squeezed core commodity trading operations, including those of
Bunge and rivals Archer Daniels Midland Co, Cargill Inc
and Louis Dreyfus Co.

Glencore CEO Ivan Glasenberg said on Wednesday the company
is looking to expand its agriculture business but has no plans
to move into any commodities it does not already trade.

Glencore Agri is one of the world’s largest suppliers of
sugar, wheat and pulses such as peas and lentils. The company
also trades cotton, corn, barley, sorghum, soybeans, canola and
other oilseeds, edible oils and meals.

Bunge’s growth strategy involves expanding into
higher-margin products including natural food ingredients and
specialty edible oils, bolstering its core grain milling and
oilseeds processing supply chain.
(Reporting by Karl Plume; Editing by Tom Brown)

Source: Reuters

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