The largest U.S. grain processor, ADM, is pursuing a takeover of Bunge, another of the giants of the grain trade that collectively are known as ABCD — ADM, Bunge, Cargill, and Louis Dreyfus, an unnamed source told Reuters. Due to low prices engendered by a string of bumper crops worldwide, margins are tight in the grain trade.
“Consolidation is seen as one remedy,” said Reuters. Swiss-based Glencore made a bid for Bunge, which is based in the United States, last year and was rebuffed. The Swiss company is barred from making a new offer until February and the source told Reuters that Bunge was keeping its options open. Bunge operates in more than 40 countries and is the largest exporter of agricultural products from Brazil, a growing force in the world market. ADM has customers in 160 countries.
“ADM is the most U.S.-focused of the major grain companies and a takeover would help it grow in South America, where Bunge is a major agricultural force,” said Reuters. The company tried to buy GrainCorp in 2013 but the Australian government blocked the sale of the Sydney company out of concerns of reduced competition. In recent years, ADM has invested in value-added products, which offer larger margins, with its purchase of natural-ingredient company Wild Flavors.