Glencore CEO Ivan Glasenberg said his company wanted to expand its agriculture business via Glencore Agriculture, which is a partnership between the London-listed mining company and two Canadian funds. "Should the transaction happen, we think the most likely combination would be between Glencore Agriculture Limited and Bunge, with Glencore maintaining a sizeable stake of up to 50 percent in the combined entity," Elena Nadtotchi, vice president and lead analyst for Glencore at Moody's, said in a statement.
"We estimate this could require a cash contribution of up to $6 billion from Glencore, assuming current valuations," she said, adding Glencore would still remain within Moody's guidance for the agency's investment grade Baa2 rating. A combination involving Glencore Agriculture would be positive for Glencore's business profile, Nadtotchi said.
But she said an outright acquisition of Bunge by Glencore or a deal that would significantly dilute Glencore's stake in the combined group was unlikely. "A scenario where a combination happens at the level of (Glencore Agriculture) and Glencore maintains a substantial stake of up to 50 percent in the enlarged group is more in line with Glencore's strategy and previous deals," she said.