Chicago | Reuters — U.S. agricultural investor Continental Grain plans to push Bunge to consider a potential sale, a person familiar with the matter said on Monday, after Archer Daniels Midland approached Bunge about a takeover.
It was unclear how Continental Grain would pressure Bunge, one of the world’s top agricultural merchants. But the company, which invests in the farm and food industry, has increased a stake in Bunge to more than one per cent, the source said, speaking on the condition of anonymity.
On Monday, the U.S. Federal Trade Commission confirmed Continental Grain owned Bunge shares, without specifying how many. The consumer protection agency granted Continental Grain approval to increase its position, a filing that signals the company will actively engage with Bunge management.
Continental Grain’s “focus is on the path to maximize value, including the potential sale” of Bunge, the source said.
Bunge, which has a market capitalization of about $10.6 billion, declined to comment (all figures US$). Shares rose 3.8 per cent to $77.99.
The company, founded in 1818 in the Netherlands, is the world’s top industrial producer of soymeal and soyoil and has a major presence in South America. But declining profits have made it vulnerable to a takeover.
Bunge and rival grain merchants such as ADM have struggled as a global oversupply of food commodities has made it tough to turn a profit on their core business: buying, processing and selling corn, soy and wheat.
In January, a source said ADM made a takeover approach to Bunge, led by CEO Soren Schroder. The companies have declined to comment on the matter, which came to light after Bunge rebuffed a tie-up proposal from commodity trader Glencore last year.
Schroder formerly worked for Continental Grain.
Five years ago, when Continental Grain held a stake in U.S. pork producer Smithfield Foods, the investment firm sent Smithfield a letter urging a breakup and also filed a presentation with U.S. securities regulators.
China’s Shuanghui International Holdings, now known as WH Group, eventually bought Smithfield for $4.7 billion.
— Tom Polansek reports on agriculture and agribusiness for Reuters from Chicago.