Bunge Nears Settlement Agreements With Activists
Grain trader’s plans to add four new directors and form a strategic-review committee could open the door to a sale
Bunge is finalizing settlement agreements with two activist investors that will add four directors to the grain trader’s board and set up a strategic-review committee that could open the door to a sale of the company, according to people familiar with the matter.
Bunge is expected to announce a pair of settlements as soon as Wednesday with hedge fund D.E. Shaw & Co. and agricultural-investment firm Continental Grain Co. The agreements would expand its 11-person board by adding three new directors now—including one from Continental—and another by year-end, the people said.
Bunge, with a market value of more than $9 billion, is also expected to form a board committee dedicated to a strategic review that could open the door to a sale of the company.
The agreements are still being finalized and could always fall through.
Bunge ranks among the largest global dealers in soybeans, wheat, corn and the like, buying crops from farmers, trading them in bulk to livestock operations and food companies, and making products like vegetable oil and flour.
White Plains, N.Y.-based Bunge’s management is working to improve the company’s performance after a global oversupply of crops pressured profits. The company has been cutting costs and expects to eliminate $250 million in annual expenses by the end of 2019.
The industry’s prospects improved this year following a drought in Argentina that helped trim stockpiles, but Bunge in August posted lower-than-expected second-quarter profits and its shares this year have lagged behind those of rivals like Archer Daniels Midland Co. Bunge is scheduled to report third-quarter results Wednesday.
Continental owns more than 1% of Bunge. It isn’t clear how much D.E. Shaw owns, but it’s significantly more than the 0.06% it disclosed as of the end of June, the people said.
The investors had been working together to push Bunge to make operational improvements and add board members, The Wall Street Journal reported earlier this month. They aren’t specifically pushing for a sale of the company, but want it to explore all possible options to boost the shares, which have done little in the past decade.
Some Bunge investors are frustrated over what they worry were missed deal opportunities. Swiss mining conglomerate Glencore PLC in 2017 confirmed it had approached Bunge about a takeover, though those talks didn’t go anywhere. ADM separately discussed a deal with Bunge, the Journal reported earlier this year, but those talks stalled out.