OTTAWA, Jan 14 (Reuters) - Canada has given its approval with certain conditions for the $34 billion merger between U.S. grains merchant Bunge and the Viterra company backed by Glencore, a green light that removes one of the last hurdles for a global agriculture consolidation of unprecedented value.
To secure the approval, Bunge must sell six grain elevators in Western Canada and commit to investing at least C$520 million ($362 million) in Canada over the next five years. Additionally, strict controls have been mandated on Bunge’s minority stake in the Saudi-owned grain firm G3 to prevent any influence over pricing or investment decisions. Bunge, Viterra, and G3 collectively represent a third of Western Canada's elevator capacity.
With this approval in Canada, the merger, announced in 2023, moves closer to completion, set to finalize in early 2025. The merger would position the combined company, valued at $34 billion with debt included, as a major player in global crops trading and processing, rivalling competitors like Archer-Daniels-Midland Co and Cargill Inc.
Despite benefiting from anticipated increased demand for soybean and canola oil for biofuel production, the merger intensifies industry consolidation, limiting farmers' options for crop buyers. Concerns were raised by Canada’s antitrust agency back in April, emphasizing potential harms to competition in grain purchasing in Western Canada and canola oil sales in the East.
The transport ministry's conditions aimed to address the cited concerns, including the establishment of a program to protect certain canola oil purchasers in Central and Atlantic Canada from unfair pricing and market instability risks. Transport Minister Anita Anand stressed the balance of promoting economic growth while upholding competition and public interest safeguards.