The report that Archer Daniels Midland Co wants to take over Bunge Ltd comes from an anonymous source close to the matter. This person claims that BG may not respond to the offer. Prices are still unknown, but a deal could potentially value BG stock at $100 per share. The stock closed at 77.56 on Friday.
A possible reason for Archer Daniels Midland Co to consider a takeover of Bunge Ltd has to do with current business in the world. The gain shipping company is dealing with an overabundance of goods, which is hurting its profits. Picking up Bunge Ltd could help it deal with this issue and reduce the competition it faces in the market.
While we don’t yet know how the Bunge Ltd will react to the offer from Archer Daniels Midland Co, we do know it recently turned down a similar offer from Glencore PLC. This new offer could start a bidding war over BG between ADM and Glencore, reports Reuters.
It’s possible that Archer Daniels Midland Co is making its offer now because Glencore can’t fight back yet. A standstill agreement won’t let the company try to intervene until Feb. 1, 2018. If the deal can go through, it would boost ADM’s business in North America, South America, Europe and Asia. However, a merger could face regulatory trouble.
ADM stock was up 4% and BG stock was up 5% as of Monday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.