![The Viterra brand may be on the way out if a deal to merge with Bunge and trade under the Bunge name goes through. File photo. The Viterra brand may be on the way out if a deal to merge with Bunge and trade under the Bunge name goes through. File photo.](/images/transform/v1/crop/frm/5Q2j7ezUfQBfUJsaqK3gfB/2a6eb85f-23fe-42ac-8239-7bcc53186e66.jpg/r0_0_1200_675_w1200_h678_fmax.jpg)
AFTER weeks of negotiations North American grain businesses Bunge and Viterra announced this week they had agreed to a merger.
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The deal, reported to be around $26.6 billion, (US$18 billion), will create one of the world's largest grain businesses, rival in size to giants such as ADM and Cargill, with a combined value of $A50 billion ($US34 billion).
The boards of both companies unanimously agreed to the deal.
Bunge, based in New York, and Viterra, which is half owned by Glencore and half by Canadian pension funds have strong footprints in North and South America, while Bunge is also a big player through the Black Sea region.
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Both businesses are also significant in the burgeoning oilseed crushing space.
The deal will mean the end of the Viterra name, with parties agreeing to trade under the Bunge banner.
Viterra has the bigger presence in Australia, particularly in South Australia where it is the dominant bulk handler in terms of market share.
Bunge has a small port terminal in WA and has been involved in grain trading.
The deal is far from a fait accompli and will have to pass competition regulators in a number of jurisdictions but should it pass through officials from the two companies hope to have the merged entity ready by the middle of next year.
The merger deal is complex with Viterra shareholders receiving Bunge stocks and cash, at a rate of around 75 per cent stocks and 25pc cash.
Bunge will also assume some Viterra debt.
This will mean that while currently the two companies are roughly equal in size in the final wash-up Bunge shareholders will own 70pc of the business and Viterra shareholders 30pc.
Greg Heckman, Bunge's chief executive, was excited about the prospects of the new company.
"The combination of Bunge and Viterra significantly accelerates Bunge's strategy, building on our fundamental purpose to connect farmers to consumers to deliver essential food, feed and fuel to the world," he said.
"Our highly complementary asset footprints will create a network that connects the world's largest production regions to areas of fastest growing consumption."
David Mattiske, Viterra's chief executive officer echoed Mr Heckman's opinion.
"Viterra and Bunge are two leading agriculture businesses. In combining our highly complementary origination, processing and distribution networks, we are better positioned to meet the increasing demand for the food, feed and fuel products we offer," he said.
The deal marks a reversal from a previous attempt in 2017 to bring the companies together, when Viterra attempted to take over Bunge, a move rejected by Bunge.
Viterra has been an active player in the mergers and acquisitions space in recent years, purchasing US-based Gavilon from Japanese trading house Marubeni last year for $US1.1 billion, ($A1.69 billion).