The companies announced the prospective partnership on Tuesday. In the deal, US-based Bunge is set to sell 45% of its equity in soybean crush operations based in Vietnam to the Singapore-based agribusiness.
Bunge will retain 45% equity and Quang Dung will continue to have its 10% share. The third partner company is a major soybean meal distributor in Vietnam and owns the majority of the Vietnamese feed milling business, Green Feed.
The project is now set to go through normal regulatory approvals and closing conditions, said Susan Burns, a Bunge spokesperson. That review is expected to be completed by the fourth quarter in 2016.
In Vietnam, Bunge is the largest producer of soybean oil and Wilmar is a major buyer of soybean oil.
Wilmar said the soybean meal distribution capabilities of the joint venture also complement its animal feed ingredients business in Vietnam, which includes rice bran, wheat bran, palm kernel expeller, copra expeller, canola meal and feed oils.
The joint venture offers a base to grow in what is considered a key market, Burns told us.
The Vietnamese meal market is already the second largest meal market in Asia following China, and is expected to grow at the fastest rate in the region, driven by fundamental demographics and the overall development of its economy. “The USDA forecasts Vietnam meal consumption should rise 43% and oil 47% by 2025," added Burns.
“It [the joint venture] is a platform from which to grow in a key market, not only in terms of downstream potential related to Wilmar’s refining capacity and strong consumer brands portfolio, but upstream as well since Bunge is originating the beans from other origins and crushing them at Phu My,” she said.
The deal links crushing facilities with oil refining and generates products for consumer businesses and feed milling, a Wilmar spokesperson told us. “It will connect upstream crushing capabilities to downstream oil refining and consumer products businesses as well as to feed milling, creating integrated operations that will be both a source and sales outlet for oil in Vietnam and that will enable increased participation in the domestic feed milling industry,” the spokesperson added.
Bunge work stretches from crop cultivation through the manufacture of animal feed, renewable fuel and consumer foods. It has a presence in about 40 countries and a workforce of 35,000.
Wilmar has focused on an agribusiness model that covers the value chain from cultivation through manufacture of several agricultural products. It has more than 500 manufacturing plants with a distribution network in China, India, Indonesia and multiple other countries and has around 92,000 employees globally.