ADM rumoured to be in takeover talks with Bunge

By Jane Byrne

- Last updated on GMT

© istock/Alexan08
© istock/Alexan08

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Archer Daniels Midland Co (ADM), on of the big four global agri-traders, has reportedly made overtures to Bunge in terms of a merger.

The Wall St Journal, citing sources, said the two US agribusiness giants were in talks about amalgamation.

However, a spokesperson for ADM would not confirm or deny if any such discussions had taken place. She told FeedNavigator the company did not comment on rumours or media speculation.

There has been increasing conjecture about the prospect of consolidation in the international grain handling industry for the past few years as commodities prices have not recovered amid the bumper grain and soybean harvests of the past few years.

Bunge has a larger foothold in South America than ADM, but in the US, ADM is more dominant. A merger of the two commodities giants would see a company with annual sales of around $110bn.

Glencore offer rebuffed

In May 2017, Bunge CEO, Soren Schroder, told analysts in an earnings conference call that the sector would start to consolidate in response to the ongoing decline in profit margins for the big players.

“We’re certainly open to look at anything that creates value for shareholders and makes us more efficient,”​ he said at the time.

Last year, soon after that statement from Schroder, Glencore confirmed it had contacted the New York listed grain trader in relation to kick-starting discussions about a takeover.

Bunge spurned Glencore’s approach then.

However, according to media reports, Glencore and Bunge struck an agreement that temporarily prevents the Switzerland headquartered company from making a hostile bid.

COFCO aiming to compete

Meanwhile, China state owned agri-trader, COFCO International, which is looking to take on the world’s biggest agricultural commodity merchants such as Cargill, Bunge and ADM, has been revamping its operations over the past 12 months and making new hires. It just announced that it has appointed former ADM manager, Frederik Groth, as head of the Asia-Pacific region excluding China.

Based in Singapore, Groth will report to COFCO International CEO, Johnny Chi.

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