Agricultural commodities trader Bunge Ltd said on Tuesday it would buy a 70 percent stake in IOI Loders Croklaan from Malaysian palm oil producer IOI Corp Berhad for $946 million, as a plan to invest in higher-margin businesses such as food ingredients and natural flavorings. Massive global grain stockpiles and low prices following four years of bumper harvests around the world have dragged down profits at Bunge and other grains traders.
The announcement is a month after Bunge reported a 34-percent drop in quarterly earnings and slashed its full-year outlook. In July, White Plains, New York-based Bunge said it was restructuring its global operations in response to tough market conditions.
The plan by Bunge to acquire a controlling stake in Loders was after a period of talks between the companies, IOI Corp said in a statement. IOI Loders' portfolio includes palm and tropical oil-derived products. The deal is expected to close in the next 12 months and IOI Loders will retain its brand and operate as part of Bunge's food & ingredients business, Bunge said.
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