Bunge Limited, Viterra merger ‘a more likely outcome’

Following a report by Bloomberg on Thursday that Bunge Limited (NYSE:) and Viterra are in potential merger talks, BMO Capital stated that the deal seems like a more likely outcome than Glencore (OTC:) acquiring/spinning BG.

The firm said in a note that Viterra seems a strong strategic fit for BG.

“Accounting differences complicate financial implications, though we believe an 8-10x EBITDA multiple seems a reasonable takeout value for Viterra, and wouldn’t be surprised if BG acquiring Glencore’s stake could be 5%+ accretive,” the firm wrote.

In addition, BMO Capital’s analysts said that while they might have expected BG to pursue smaller acquisitions, they believe a transaction between the two parties would be consistent with messaging to the investment community recently. They noted that Viterra had been one of the primary assets speculated as an acquisition target by investors in recent weeks.