Bunge Announces Sale of its Ownership Share in its Sugar and Bioenergy Joint Venture in Brazil

Rhea-AI Summary

Bunge Global SA (NYSE: BG) has agreed to sell its 50% stake in BP Bunge Bioenergia to its joint venture partner, bp. The joint venture, established in 2019, integrates both companies' bioenergy and sugarcane ethanol operations across 11 mills in Brazil. The sale is expected to complete in Q4 2024, with bp assuming full ownership. This transaction aligns with Bunge's strategic focus on core businesses and aims to bolster its balance sheet, potentially generating around $800 million in net proceeds. The deal is pending customary regulatory approvals. J.P. Morgan serves as Bunge's financial advisor, and Tauil & Chequer Advogados associated with Mayer Brown is its legal counsel.

Positive

• Expected net proceeds of approximately $800 million.
• Focus on core businesses for strategic alignment.
• Strengthened balance sheet post-transaction.

Negative

• None.

Insights

Financial Analyst

Bunge's sale of its 50% share in BP Bunge Bioenergia for an estimated $800 million signals a strategic pivot to focus on its core businesses. This move is designed to strengthen Bunge's balance sheet and allow for reallocation of resources to more profitable sectors. Making a net gain from a non-core asset improves liquidity and reduces risks associated with volatile bioenergy markets. Investors should view this as a positive shift towards stability and potential growth in core business areas.

With this sale, Bunge can enhance its financial flexibility, potentially leading to improved return on equity (ROE) and earnings per share (EPS). It's essential to monitor how Bunge reinvests these proceeds and whether it leads to tangible growth in its primary sectors like agribusiness and food ingredients.

While the sale divests a significant asset, the efficient reallocation of capital to strategic areas could result in long-term shareholder value enhancement.

Market Research Analyst

From a market perspective, Bunge's decision to sell its stake in BP Bunge Bioenergia reflects a broader industry trend of specialization and divestiture of non-core assets. This could potentially reduce operational complexity and related costs. Such strategic refocusing often allows companies to better compete in their primary markets. Bunge's exit from the bioenergy venture aligns with its stated strategy and adds predictability to its revenue streams.

It's noteworthy that Bunge is capitalizing on a high point, as bioenergy sectors are currently favorable. This timing indicates strategic foresight and minimizes risks associated with fluctuating commodity prices. Investors should appreciate this timing as it demonstrates Bunge's ability to maximize asset value effectively.

Legal Expert

The sale's completion, subject to regulatory approvals, raises potential concerns regarding the regulatory landscape in Brazil. Investors should keep an eye on possible delays or conditions imposed by Brazilian authorities, which could affect the transaction's final proceeds and timing. Typically, such approvals are procedural but can sometimes introduce unexpected hurdles.

Additionally, the involvement of J.P. Morgan and Tauil & Chequer Advogados, associated with Mayer Brown, ensures a well-supported and likely smooth transaction. The adherence to customary conditions also implies that both Bunge and bp have prepared comprehensive compliance strategies.

ST. LOUIS--(BUSINESS WIRE)-- Bunge Global SA (NYSE:BG) has entered into definitive agreements to sell its 50% share in BP Bunge Bioenergia to bp, its joint venture partner. BP Bunge Bioenergia, a joint venture formed in 2019, combined both companies’ Brazilian bioenergy and sugarcane ethanol businesses with a total of 11 mills located across the Southeast, North and Midwest regions of Brazil. At closing, which is expected to happen in the fourth quarter of 2024, bp will own 100% of the business.

Bunge’s Chief Executive Officer Greg Heckman commented: “We are pleased with the way the business is operating and the great work the team has done to become a leader in sugar and bioenergy since we created this joint venture with bp. However, this business is not core to Bunge’s long-term strategy and this transaction will allow us to focus and invest in our core businesses while also further strengthening our balance sheet. bp has been a valued partner to Bunge, and we wish them and the team continued success.”

This second and final monetization event of Bunge’s ownership in the business is expected to yield net proceeds close to $800 million, depending on timing of closing and customary closing adjustments. Closing of the transaction is subject to customary conditions, including receipt of required regulatory approvals.

J.P. Morgan is acting as exclusive financial advisor to Bunge, and Tauil & Chequer Advogados associated with Mayer Brown, is acting as legal counsel.

About Bunge

At Bunge (NYSE: BG), our purpose is to connect farmers to consumers to deliver essential food, feed and fuel to the world. With more than two centuries of experience, unmatched global scale and deeply rooted relationships, we work to strengthen global food security, increase sustainability where we operate, and help communities prosper. As a world leader in oilseed processing and a leading producer and supplier of specialty plant-based oils and fats, we value our partnerships with farmers to bring quality products from where they’re grown to where they’re consumed. At the same time, we collaborate with our customers to develop tailored and innovative solutions to meet evolving dietary needs and trends in every part of the world. Our Company has its registered office in Geneva, Switzerland and its corporate headquarters in St. Louis, Missouri. We have approximately 23,000 dedicated employees working across approximately 300 facilities located in more than 40 countries.

Website Information

We routinely post important information for investors on our website, www.bunge.com, in the "Investor Center" section. We may use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Cautionary Statement Concerning Forward Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward looking statements to encourage companies to provide prospective information to investors. This press release includes forward looking statements that reflect our current expectations and projections about our future results, performance, prospects and opportunities. Forward looking statements include all statements that are not historical in nature. We have tried to identify these forward looking statements by using words including "may," "will," "should," "could," "expect," "anticipate," "believe," "plan," "intend," "estimate," "continue" and similar expressions. These forward looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward looking statements. The following factors, among others, could cause actual results to differ from these forward looking statements: the impact on our employees, operations, and facilities from the war in Ukraine and the resulting economic and other sanctions imposed on Russia, including the impact on us resulting from the continuation and/or escalation of the war and sanctions against Russia; the effect of weather conditions and the impact of crop and animal disease on our business; the impact of global and regional economic, agricultural, financial and commodities market, political, social and health conditions; changes in government policies and laws affecting our business, including agricultural and trade policies, financial markets regulation and environmental, tax and biofuels regulation; the impact of seasonality; the impact of government policies and regulations; the outcome of pending regulatory and legal proceedings; our ability to complete, integrate and benefit from acquisitions, divestitures, joint ventures and strategic alliances, including without limitation Bunge’s pending business combination with Viterra Limited (“Viterra”); the impact of industry conditions, including fluctuations in supply, demand and prices for agricultural commodities and other raw materials and products that we sell and use in our business, fluctuations in energy and freight costs and competitive developments in our industries; the effectiveness of our capital allocation plans, funding needs and financing sources; the effectiveness of our risk management strategies; operational risks, including industrial accidents, natural disasters, pandemics or epidemics and cybersecurity incidents; changes in foreign exchange policy or rates; the impact of our dependence on third parties; our ability to attract and retain executive management and key personnel; and other factors affecting our business generally.

The forward looking statements included in this release are made only as of the date of this release, and except as otherwise required by federal securities law, we do not have any obligation to publicly update or revise any forward looking statements to reflect subsequent events or circumstances.

You should refer to "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 22, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240620848637/en/

Media Contact:

Bunge News Bureau

Bunge

636-292-3022

news@bunge.com

Investor Contact:

Ruth Ann Wisener

Bunge

636-292-3014

Ruthann.wisener@bunge.com

Source: Bunge Global SA

FAQ

What is the value of Bunge's sale of its stake in BP Bunge Bioenergia?

Bunge expects the sale to yield net proceeds close to $800 million.

When will Bunge finalize the sale of its ownership share in BP Bunge Bioenergia?

The transaction is expected to close in the fourth quarter of 2024.

Why is Bunge selling its 50% stake in BP Bunge Bioenergia?

Bunge is selling its stake to focus on its core businesses and strengthen its balance sheet.

Who is Bunge's joint venture partner in BP Bunge Bioenergia?

Bunge's joint venture partner is bp.

How many mills are involved in the BP Bunge Bioenergia joint venture?

The joint venture includes 11 mills located in Brazil.