Pension funds back Viterra-Bunge merger

A merger between Glencore Plc’s Viterra unit and Bunge Ltd. to create a $25-billion (U.S.) agricultural trading behemoth has the support of two of Canada’s biggest pension funds, according to a person with direct knowledge of the matter.

Canada Pension Plan Investment Board and British Columbia Investment Management Corp. are willing to swap their combined 49.98 per cent stake in Viterra for investments in the merged entity, said the person who asked not to be named discussing a private deal.

Spokespersons for the two pension fund managers and Viterra declined to comment.

A merger would create a trader big enough to take on the industry’s elite: Cargill Inc. and Archer-Daniels-Midland Co.

Viterra and Bunge are negotiating the structure of a potential transaction, Bloomberg reported last week. One option being discussed envisions a stock deal where Bunge shareholders would own a majority of the combined group, according to the people.

Glencore has flirted with the idea of a deal with Bunge on and off for years, and there’s no certainty it will be able to reach an agreement this time around. In 2017, the Swiss commodities giant approached Bunge about a friendly takeover, but was publicly rebuffed by the U.S. firm. Since then, Bunge has replaced its new chief executive officer and other senior executives.

The Globe and Mail newspaper reported Monday the Canadian pension funds would almost certainly swap their stakes for a stake in Bunge, citing people close to deal talks. Glencore Plc, with a 49.99 per cent stake, would do the same, the newspaper reported.