Agribusiness giant Bunge Ltd has signed a definitive agreement to acquire the 55% controlling stake in Cereol SA, a leading French oilseed processor, from Italian energy giant Edison for €449.2m (US$444.3m) in cash.
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As required by French law, Bunge intends to make a same-priced offer to buy the 45% of Cereol shares that will remain publicly held after the closing of its agreed 55% purchase.
Assuming 100% of the remaining shares are purchased as part of this process, the total price paid by Bunge for Cereol’s equity will be €821.4m. Bunge will also pay up to €77m to Cereol shareholders upon the resolution of pending arbitration against Cereol, and assume Cereol’s debt upon closing between late 2002 and early 2003. The deal is subject to regulatory approvals in the US and the EU.
World’s leading oilseed processing company
The transaction will make Bunge the world’s leading oilseed processing company, with integrated operations across key geographic regions. The acquisition will increase scale and efficiency, expanding its global reach and resulting in a stable financial profile. In 2001, Bunge reported net sales of US$11.5bn and operating income of US$527m.
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By GlobalDataCereol, with 6,100 employees and 52 industrial plants in Europe and the US, processes oilseeds and manufactures, distributes and sells food oils, meals for animal nutrition and food ingredients. In 2001, it reported net sales of €4.7bn and EBITDA of €272.7m.
Cereol is also a leader in the production of soy ingredients. In 2001, it reported net sales of €228.1m in its specialty products division, which includes soy ingredients sales. In the US, Cereol operates two subsidiaries, Central Soya, a major processor of soybeans in the Midwest and Eastern US, and CanAmera, the largest processor of canola, with operations strategically located throughout Canada.
Chairman and CEO of Bunge, Alberto Weisser, stated: “The acquisition expands our agribusiness operations in the US and substantially enhances our presence in Europe. It adds scale, enabling us to operate more efficiently through better logistics and higher volumes. Bunge will be better positioned to grow more quickly, give employees more opportunities and deliver enhanced value to our shareholders.”
Weisser added: “The businesses, strategies and cultures of Cereol and Bunge are highly complementary. This is an outstanding opportunity and we welcome the talented Cereol management team whose expertise and relationships will be greatly valued.”
Carl Hausmann, chairman and CEO of Cereol, stated: “The core focus of both Bunge and Cereol is agribusiness, and as a result, this transaction will create a focused and highly-motivated company with the ability to deliver superior service to our global customer base. We look forward to working with our new colleagues at Bunge to maximise the potential of this combination.”
Synergies
Bunge expects to achieve synergies of about €20-25m by the end of the first full year of combined operations, increasing to about €45-50m in the third year.
CFO Bill Wells stated: “Bunge utilises a disciplined set of criteria when considering transactions and the acquisition of Cereol clearly fits within our stringent parameters for return on equity and net assets, among other metrics. In addition to bringing significant strategic benefits, we expect the acquisition to be accretive to our earnings per share within the first year of combined operations.”
