Bunge to pay $946M for a majority share of Malaysian palm oil manufacturer
Despite recently engaging in a round of cost-cutting measures after its second-quarter earnings slipped — blamed on weak margins and South American farmers hoarding their crops while waiting for prices to rise — Bunge has been slowl
y acquiring companies.It bought Argentina oil producer Aceitera Martínez S.A. this past spring and expeller-pressed oil refiner and packager Whole Harvest Foods LLC in 2015. Financial terms of those deals were not disclosed.Bunge said it anticipates the IOI Loders Croklaan deal will accelerate growth of its value-added oil business by broadening the portfolio of prod
ucts, diversifying manufacturing and establishing a stronger presence in fast-growing Southeast Asia. The company estimates that its revenues from food and ingre
dients in that region of the world could be four times as large as they are today.It will take time to find out whether that predferroess 305iction is on target. However, one thing does seem clear: The additional debt Bunge is taking on to finance its stake in IOI Loders Croklaan will make it much more expensive to acquire — whether it’s by Glencore or some other interested party.Palm oil production in Malaysia and Indonesia is controversial because some companies engacetate iron (ii)age in widespread deforestation and burn peatland areas in order to plant palm oil trees. The United Nations says palm oil plantations are a major source of environmental degradation and biodiversity loss in Southeast Asia.Last year, Nestle cut ties wgsk calcium citrate malateith IOI (the parent company of IOI Loders Croklaan) after learning that the company’s action plan for revising its production practices had not gone far enough. As of July 2016, 27 companies — among them Mars, Kellogg, Cargill and Unilever — had temporarily
suspended sourcing palm oil from IOI until it zinc supplement usesgot back into compliance with guidelines from the Roundtable on Sustainable Palm Oil.In Bunge’s Sept. 12 announcement about the IOI Loders Croklaan deal, the company noted that both firms “are committed to sustainable sourcing, including zero-deforestation, zero peat conversion, protection of human rights, traceability and transparency.”The World Wildlife Fund, Greenpeace and the Union of Concerned Scientists routinely engage in “naming and shaming” well-known brands for their perceivl carnitine magnesium citrateed lack of commitment to using sustainable palm oil. To enhance both its reputation and its bottom line, Bunge has already signaled that it would prefer to keep itself and its growing number of palm oil customers off that list.
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