January 19, 2010
Bunge to sell fertiliser holdings
Bunge Ltd., US leading integrated global agribusiness and food company, is currently engaged in discussions with Vale SA, a diversified metals and mining company, to sell its fertiliser business in Brazil, including its 42.3% stake in fertiliser company Fosfertil.
The deal valued at US$3.8 billion would be Vale''s biggest acquisition since its US$18.2 billion takeover of Inco Limited, a nickel producing company in Canada, in 2006. Vale is the largest producer and exporter of iron ore across the globe.
Of late, Vale has been eyeing the fertiliser business as part of a strategy to benefit from rising fertiliser demand due to increased global food consumption and agriculture output in South America and Asia.
Fosfertil is a major provider of raw materials for fertiliser producers and mixers in Brazil, and plays an integral part in the country''s agricultural sector. If the deal materialises, Vale would gain a strategic advantage in the fertiliser business of the country.
On the other hand, Bunge''s potential exit has probably stemmed from the government''s move to reform the country''s mining regulations to increase federal taxes and royalties from the sector and stimulate domestic fertiliser production.
Bunge supplies fertiliser to farmers in South America, originates transports and processes oilseeds, grains and other agricultural commodities worldwide, produces commercial food products and supplies raw materials and services to the bio-fuels industry.