Funds Press for Change at Bunge -- WSJ
October 09 2018 - 3:02AM
Dow Jones News
D.E. Shaw joins with Continental Grain in seeking board seats at
the grain trading firm
By Dana Mattioli and Cara Lombardo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 9, 2018).
D.E. Shaw & Co. has boosted its stake in Bunge Ltd. and is
pushing the grain trader to make operational improvements and add
board members, according to people familiar with the matter.
The hedge fund is working with Continental Grain Co., an
agricultural-investment firm. The firms, which together own less
than 5%, have been speaking to Bunge's management in recent weeks
and could reach a settlement with the company, the people said.
The investors are trying to convince the White Plains, N.Y.,
grain trader to make its operations more focused, improve margins,
and replace board members. They aren't pushing for a sale of the
company, which in recent years has received takeover interest from
Archer Daniels Midland Co. and Glencore PLC, but eventually could
do so, the people said.
"We have been engaged in ongoing dialogue with D.E. Shaw and
Continental Grain and value their combined input, as we do with all
our shareholders, with the objective of enhancing shareholder
value," a Bunge spokeswoman said.
It isn't clear how much of Bunge D.E. Shaw owns, but the people
said it is more than the 0.06% the hedge-fund firm disclosed as of
the end of June.
Continental Grain owns more than 1% of Bunge's shares.
In March, The Wall Street Journal reported that Continental
Grain was preparing to push Bunge to consider strategic options.
Bunge, which has a market value of about $10 billion, was then in
talks to sell itself to ADM. At the time, the negotiations were
progressing at a slow pace and they later fell apart.
Last year, Glencore, a Swiss commodity trader, made a takeover
approach to Bunge, but the two sides didn't come to a deal.
Based in White Plains, N.Y., Bunge is among the world's biggest
dealers in basic foodstuffs such as soybeans, corn and wheat. Its
shares have returned 6.9% over the past 10 years including
dividends, much less than the S&P 500's 13.8% total return,
according to FactSet.
Agricultural companies like Bunge and ADM have struggled with a
growing glut of crops world-wide, brought on by consecutive bumper
harvests in North and South America. Prospects this year have
improved due partly to a drought in Argentina, which trimmed
soybean stockpiles and helped lift prices.
Bunge in August surprised investors with a $12 million
second-quarter loss, driven by derivatives positions designed to
protect the company's soybean-processing profits. Bunge Chief
Executive Soren Schroder said the company stood by its $1.3 billion
full-year profit forecast, assuring investors the company has
locked in favorable profit margins over the remainder of the year.
The company is also cutting costs, and expects to eliminate $150
million in expenses this year.
D.E. Shaw -- which has been increasing its activist practice
after hiring Quentin Koffey from Elliott Management Corp. --
typically prefers to work with management behind the scenes. The
fund early this year shook up the board at Lowe's Cos. after
presenting the home-improvement retailer research that included an
analysis of satellite imagery of the number of cars in its parking
lot compared to that of rival Home Depot Inc.
Jacob Bunge contributed to this article.
Write to Dana Mattioli at dana.mattioli@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
October 09, 2018 02:47 ET (06:47 GMT)
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