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Bunge to buy 70% stake in palm oil producer Loders for $946m

EBR Staff Writer Published 13 September 2017

Bunge has agreed to acquire a 70% stake in palm oil producer IOI Loders Croklaan (Loders) for $946m from Malaysian conglomerate IOI Corporation Berhad.

The transaction will create a major solutions provider in the B2B oils segment while boosting its food and ingredients business.

It would be done in the form of cash payments of €297m and $595m to the Malaysian conglomerate IOI Corporation which will retain a 30% stake in Loders.

Bunge expects the Loders transaction to grow its value-added capabilities further along with its footprint and scale in core geographies.

It also says that its enhanced product offering following the completion of the deal will help the growth of its worldwide customers further.

Loders is a producer of a broad range of palm and tropical oil-derived products which are used in bakery, confectionery and infant nutrition applications.

It caters to global food industry customers across more than 100 countries while earning $1.6bn in the fiscal year 2016.

Bunge CEO Soren Schroder said: “This is a compelling transaction for Bunge. It delivers on our stated objective to expand our value-added business by accelerating our growth in B2B semi-specialty and specialty oils.

“Together with Loders, we will have a comprehensive product offering derived from seed and tropical oils, with leading innovation, application capabilities and sustainability programs. This complete seed and tropical oil portfolio will position Bunge to be a full service partner and uniquely able to help our customers innovate and grow for the future.”

For Loders, the equity investment from Bunge will help it in gaining exposure in additional markets like Latin America and India where the latter has a significant presence.

IOI CEO Dato' Lee Yeow Chor said: “From our discussions with Bunge about a potential partnership, we can see that Loders will benefit greatly from Bunge's global asset footprint and expertise in seed oils sourcing and seed oil-based product offerings.

“IOI is excited about the opportunity to participate in the future growth of the combined Bunge and Loders business and to realize our shared ambition of forming a formidable global specialty edible oils player.”

Under the terms of the transaction, Bunge will have the rights to acquire the remainder stake in Loders from IOI and vice versa with the Malaysian conglomerate also having the option to quit the business by divesting its stake to the US-based firm.

The transaction is anticipated to be completed in 12 months time depending all the necessary regulatory approvals and approval of a majority of IOI shareholders among other customary closing conditions.

Image: Bunge to acquire 70% stake in Loders from IOI. Photo: courtesy of Chaiwat/Freedigitalphotos.net.