Grain Growers of Canada decries Bunge-Viterra deal

Source:  World Grain

Grain Growers of Canada (GGC) said the approval of Bunge Global SA’s acquisition of Viterra does not go far enough to protect market competition for Canadian farmers and it is “extremely disappointed” by the decision announced Jan. 14 by Minister of Transport Anita Anand.

Particularly noteworthy, GGC said, was that the conditions placed on the deal by the government do not include divestment of G3 by Bunge. G3 Global is 75% owned by the Saudi Agricultural and Livestock Investment Company (SALIC) and 25% owned by St. Louis, Missouri, US-based Bunge.

G3 Global Holdings is the majority owner of G3 Canada Ltd., which operates 19 grain elevators in Western Canada and one in Quebec and port terminals in Thunder Bay and Hamilton in Ontario and Quebec City and Trois Rivieres in Quebec. Viterra and G3 compete for crops such as canola, wheat, durum, rye, barley, peas, corn and soybeans across Western Canada.

While the Transport Canada approval conditions include divestments of six grain elevators in Western Canada and a $520 million investment commitment from Bunge, GGC described those measures as “woefully inadequate to address the profound impact on market competition.”

“Minister Anand’s decision to approve the acquisition, even with conditions, doesn’t go nearly far enough,” said Kyle Larkin, executive director of GGC, which represents over 65,000 producers. “The divestment of six grain elevators is a token gesture in the face of a company that maintains a 25% stake in G3, greatly reducing competition across the Prairies and in Quebec. These conditions do little to offset the $770 million annual cost this merger will impose on farmers.”

GGC noted that Canada’s Competition Bureau and research conducted by the University of Saskatchewan found that an acquisition without a divestment of G3 would weaken competition in certain geographic regions across the country, notably in Manitoba and Saskatchewan canola crushing markets. The university report calculated a $770 million loss in revenues for grain farmers annually.

Additional concerns raised by GGC include the market concentration of grain terminals at ports in Quebec and the implications of the merger on the announced canola crushing facility in Regina, Saskatchewan.

“This decision is a direct hit to producers’ revenue,” Larkin said. “For example, the average grain farm in Manitoba stands to lose $10,000 in revenue annually. This decision compounds an already difficult landscape as farmers continue to face rising input costs, falling commodity prices and increased taxes.”

Transport Canada said the conditions it imposed on the deal address concerns raised about the Bunge-Viterra merger deal during the public assessment period required under the Canada Transportation Act. In late April 2024, Canada’s Competition Bureau said it concluded that Bunge’s proposed acquisition of Viterra is “likely to result in substantial anticompetitive effects” and a “significant loss” in Bunge and Viterra’s competition in Canadian agricultural markets. The bureau’s report then was passed to the minister of transport for review.

“This is a missed opportunity to protect competition in Canada’s grain sector and prioritize the interests of producers who grow the food that Canada and the world rely on,” Larkin said. “We are urging the government to revisit these conditions, strengthen measures to foster competition, and take meaningful steps to support Canada’s grain farmers.”

Bunge unveiled the agreement to acquire Rotterdam, The Netherlands-based Viterra, owned by Switzerland-based commodity trading giant Glencore PLC since 2012, in mid-June 2023. Under the deal, approved by both companies’ boards, Viterra shareholders are slated to receive about 65.6 million shares of Bunge stock, valued at about $6.2 billion, and roughly $2 billion in cash, with Bunge also assuming $9.8 billion of Viterra’s debt.

At the time, Bunge and Viterra said they expected the transaction to close in mid-2024, pending customary closing conditions and approvals by Bunge shareholders and regulators. But delays in securing regulatory clearance from around the globe have since pushed back that timeline.

Bunge shareholders approved the deal in October 2023, while the European Commission gave the go-ahead to the merger this past August. Bunge is still awaiting approval from China.

Tags: , ,

Got additional questions?
We will be happy to assist!