Glencore has been itching to do a transaction for some time. Last Monday, Glen confirmed its interest in buying Teck’s coal business as a separate entity, though it would prefer to buy the entire company. The next day, Glen announced its intention to merge Viterra, its agribusiness, with Bunge.
For Glencore investors, Viterra is immaterial; for Bunge, however, the deal is significant.
Glen’s management is hoping to realize the full value of Viterra by doing a stock deal with Bunge. Glencore will own ~15% of the combined company and receive $1bn in cash. In sum, this amounts to 5.6% of Glen’s market cap as of Friday’s close. Again, it’s small, but the share price reacted positively on the news and the transaction terms seem fair to both parties.
Glencore is one company that will be in my portfolio for the next decade