Reuters — Shares of U.S. commodities trader Bunge surged on Friday after the Wall Street Journal reported that Glencore had a standstill agreement that temporarily prevents the Swiss company from making a hostile bid for Bunge.
Bunge had rebuffed a takeover approach by Glencore in May. Speculation has swirled for months that Glencore would make another takeover approach. The standstill agreement suggests it is still interested in a deal and may be only biding its time, the newspaper said.
The standstill agreement, in which Glencore agreed with Bunge not to buy any more Bunge shares or make an unsolicited takeover approach, expires early next year, the Journal said, citing sources.
Glencore declined to comment on the story. Bunge did not immediately reply to a request for comment.
A string of poor results by large multinational grain trading companies has whetted investors’ appetite for an industry consolidation.
Large grain traders have struggled in recent years as a global oversupply and thin trading margins have squeezed their core commodity trading operations, including those of Bunge and rivals Archer Daniels Midland, Cargill and Louis Dreyfus.
The companies, known as the ABCD quartet of grain trading giants, have also been facing stiff competition from rivals like Glencore that are seeking to expand agriculture units and gain a greater foothold in the key production areas such as the U.S. and South America.
Glencore Agriculture, a partnership between the London-listed mining company and two Canadian funds, includes the operations of Canadian grain handler Viterra, which it took over in 2012.
Bunge shares were up 6.7 per cent at US$72.36 on Friday afternoon. Glencore shares rose 2.4 per cent to 376.68 pence.
— Reporting for Reuters by Karl Plume in Chicago; additional reporting by Barbara Lewis in London.