For decades now, Argentina’s exports of both grains and their by-products have been highly concentrated in just five companies that stand for more than 60% of shipments, according to the Secretary of Agriculture’s official 2022 data. Specifically, four US companies and China’s Cofco are at the top, but with the merger of two giants like Bunge and Viterra, the agribusiness will be led by even fewer companies. 

According to projections, this new company will be the local leader in sunflower oil exports —around 60% of total exports— soybean oil and flour —around 31%— and grains like wheat, barley and soy, —20%, 17% and 25%, respectively.   

In the national grains export ranking, Bunge ranked fourth in 2022 with 10% of the total, about 6.1 million tons, below US companies ADM and Cargill and China’s Cofco. Until now, Viterra was owned by Canadian capital backed by Swiss company Glencore— the undisputed leader in soy by-products and oils basically because since the fall of Vicentín, whose clients were mostly absorbed, and who is also a partner in the Renova grinding and biodiesel plant. [Translator’s note: Vicentin is a conglomerate of Argentine grain export companies. It was the tenth largest exporting company in 2019, and went bankrupt the following year.]   

Operating in Argentina through the Oleaginosa Moreno firm, Viterra exported 5.8 million tonnes of by-products last year, 20.7% of the total 27.9 million tonnes. Something similar occurred with their edible oils shipments, around 28.9% of the total. In both cases, the reason behind this phenomenon lies in the fact that Viterra operates in Vicentín’s factories.  

With the merger of two giants like Bunge and Viterra, the first conclusion is that US companies will be the definite leaders of the grain export business in Argentina, the biggest provider of dollars to the country with approximately US$40 billion last year. 

China’s Cofco was at the top of unprocessed grains shipments a while back, but lost its place to US’ Cargill in 2020. In the oils and byproducts sector, Viterra and Vicentín —owned by Argentina capitals— were in close competition for the top spot, but when the latter defaulted, the Canadian company ended up absorbing most of its operation, even its grinding capacity, by actively using their factories under service-providing contracts. Local companies like Aceitera General Deheza (AGD) or Molinos Agro, the agroindustrial arm of the Pérez Companc family, are positioned much lower on the business’ ranking. 

Argentina’s National Antitrust Commission hasn’t received any formal communication regarding the merger, but companies have one week to do so after the deal is formalized. In any case, commission sources say they will evaluate the case to determine the extent of the merger. There is speculation the new company will have to divest some local assets —mostly in the by-products segment— in order to avoid becoming a monopoly.  

Under the terms of the agreement, which was unanimously approved by Bunge and Viterra boards, Viterra shareholders would receive approximately 65.6 million Bunge shares for a total value of approximately US$ 6.2 billion and approximately US$ 2 billion in cash, a combination of approximately 75% in Bunge shares and 25% cash.

According to the statement, as part of the transaction, Bunge will assume US$ 9.8 billion of Viterra’s debt, close to US$ 9 billion of it tied to highly liquid, readily tradable inventory. The merger is expected to close in mid-2024.
Originally published in Ambito.com