ADM pursues big ag merger with grain trader Bunge

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Top U.S. grain merchant Archer Daniels Midland Co has proposed a takeover of Bunge Ltd, according to a person familiar with the approach, which could set up a bidding war with Swiss-based rival Glencore Plc.
Large grain traders that make money by buying, selling, storing and shipping crops have struggled in recent years with global oversupplies. Thin margins have squeezed core commodity trading operations, including those of ADM, Bunge, Cargill Inc and Louis Dreyfus Co, which together are known as the “ABCDs” and dominate the industry.

Consolidation is seen as one remedy. Glencore last year sought a tie-up with Bunge in what was viewed as a start of a wave of mergers and acquisitions in the industry.

Bunge, which rebuffed an acquisition offer from Glencore last year, might not follow up on ADM’s proposal, the source said, requesting anonymity because the approach is confidential. A standstill agreement prevents Glencore from making a new offer until next month, and Bunge is keeping its options open for now, the source added.

White Plains, New York-based Bunge operates in more than 40 countries and is Brazil’s largest exporter of agricultural products, while Chicago-based ADM says it has customers in 160 countries.

Bunge, which has a market capitalization of $9.79 billion, closed up 11.4 percent at $77.56 on Friday. ADM has a market cap of $22.64 billion.

ADM is the most U.S.-focused of the major grain companies and a takeover would help it grow in South America, where Bunge is a major agricultural force.
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