NYSE-listed grain trader Bunge (BG) said it is not in talks with Glencore (GLNCY) after the Swiss commodities trader and mining company on Tuesday lit a fire under Bunge's stock by revealing that it had made an informal approach for the business.
"Bunge...is not engaged in business combination discussions with Glencore Agriculture or Glencore plc," said the White Plains, NY-based group. "Bunge is committed to continuing to execute its global agri-foods strategy and pursuing opportunities for driving growth and value creation."
Bunge shares leaped 16.6% on Tuesday to close at $81.70 after the Wall Street Journal revealed the approach from Glencore. Glencore later confirmed its interest in "a possible consensual combination" with Bunge. Glencore gave no details of its approach and warned that a deal may not eventuate.
Bunge's apparent reluctance to pursue a tie-up had a sobering effect on its stock, which fell 4.7% to $77.85 in after hours trading. Bunge has a market capitalization of $11.53 billion based on the group's closing price on Tuesday.
Glencore's approach lines up with a statement made by its largest shareholder and CEO Ivan Glasenberg, who in February said he wanted to grow the groups agricultural trading operations in the US where he felt that Glencore was underrepresented.
"Strategically, an acquisition of Bunge would provide Glencore with a strong footing in the US agricultural market (Bunge is among the biggest grain trading companies; active in the flow of crops from farmer's fields to food plants and livestock operations)," Goldman Sachs analysts including Eugene King noted on Wednesday.