There's some concern about the loss of competition in the grain sector with the proposed merger of two mega rivals in the grain industry.

The announcement of a merger between U.S. based Bunge and Viterra would create a global agribusiness worth about U.S. $34 billion.

Bunge's purchase offer of U.S. $8.2 billion dollars will see Viterra shareholders receive 65.6 million shares of Bunge stock (valued at U.S. $6.2 billion) and U.S. $2 billion in cash.

For Viterra shareholders Glencore, CPP Investments, and British Columbia Investment Management Corporation that will mean a mix of approximately 75% Bunge stock and 25% cash.

In addition, Bunge will acquire $9.8 billion of  Viterra debt and has plans to repurchase in time US$2 billion of its own stock. 

The terms of the deal were approved unanimously by the Board of Directors for both Bunge and Viterra.

The general prairie farm groups say they'll be watching what happens as it moves through the process over the next few months from shareholder votes to regulatory approval not just in Canada, but also in Australia and Argentina.

Lynn Jacobson,  president of the Alberta Federation of Agriculture says if you go forward with a merger such as this, you do eliminate a lot of the competition.

"That's one of the great concerns of us as producers. Because lots of times we don't have a lot of options on where we're delivering and some of the players and people that we buy from. So keeping competition with our industry is very critical for us as producers."

The president of the Keystone Agricultural Producers Jill Verwey says they want to ensure this merger will lead to additional opportunities for farmers.

"We certainly don't want to see any negative impact on farmers. So, we will be continuing to closely monitor that as it goes forward in the next number of months."

The news of the merger is a double-edged sword for Ian Boxall, president of the Agricultural Producers Association of Saskatchewan.

"While there might be some benefits, it's also a loss of competition. We're seeing it in every sector in agriculture whether it be from auction houses, equipment dealers, to input suppliers and now we're seeing it in our elevators. You saw it with P and H and Louis Dreyfus a number of years ago and it is a little bit of a concern because we just lose that competition in the marketplace for our grain."

Bunge operates 300 facilities across 40 countries, while Viterra operates in 37 countries and owns and operates 59-grain elevators, eight special crop facilities, two oilseed processing plants, and six port terminals in Canada.

Jacobson says putting Bunge and Viterra together reduces the competition and puts them in a situation where they're really going to be able to control a lot of the market.

"Looking at that merger there's a lot of overlap and facilities too and that takes out a lot of the competition. If it does go ahead,  I think the government has to look at some form of sell-off of assets to other companies to keep the competition within our industry."

Once all the dust has cleared and Bunge's buyback of stocks has occurred the merger will see Viterra shareholders with a 30 per cent stake in the new company.
 
The merger is expected to close in mid-2024 and will be subject to the customary closing conditions, Bunge's shareholder vote, and regulatory approvals.