WHITE PLAINS, N.Y. — Bunge Ltd. and IOI Loders Croklaan are “a natural match,” Soren W. Schroder, chief executive officer of Bunge, told analysts in the wake of the announcement that Bunge has agreed to acquire a 70% stake in Loders for approximately $946 million from the IOI Corporation Berhad.
“Together with Loders, we are creating the leading global platform in edible oils, aimed at the B2B segments, as well as an unmatched global footprint, with best-in-class innovation capabilities,” Mr. Schroder said during a Sept. 12 presentation. “The acquisition accelerates the growth of our value-added business and is immediately cash accretive. Cost synergies are significant at $45 million per year by year three, and we estimate revenue synergies to be approximately $35 million in the near term.”
He said Loders’ standalone EBITDA is projected to grow at low double digits per year over the next three years, and when integrated with Bunge will nearly double the earnings of the company’s oils franchise.
“The combined business will focus intensely on customer solutions and clear commitments to sustainability,” he said.
In agreeing to acquire Loders, Bunge is taking a major step that has been a goal for the company for some time, Mr. Schroder said. That goal: To create a substantial market position in higher-value specialty oils.
“Loders is an ideal fit with our strategy in every respect,” he said. “It complements and strengthens our existing core B2B oils business, which is supported by our leading global oilseeds crush presence. The combined geographic footprint and product range will be unmatched. And the scale, efficiencies and product technology will give us important advantages, serving both global and regional customers. Combined with our recently announced Competitiveness Program, this acquisition puts Bunge in a strong position to grow earnings and build a higher-margin oils portfolio over the near term.”
As a leader in the applications and innovation of tropical oils and a history dating back 100 years, Loders is well respected among the world’s leading food companies. The company has $1.6 billion in revenue and processes 1.6 million tonnes of raw material in seven locations in North America, Europe and Malaysia. Two facilities in China and Ghana also are nearing completion.
Loders products are used in the baking, confectionery and human nutrition segments.
“Bunge and Loders are a natural match,” Mr. Schroder said. “Together, we create a full range of seed and tropical oil products, leading innovation and applications capabilities, an impressive global footprint and the business built on value chain integration and a clear commitment to sustainability.
“Edible oils are the nutritional building blocks in food production with many ways to solve for taste, functionality and health. The ability to work across a full range of raw materials from soy, sun, canola, olive, to lecithin, palm, coconut, to shea sets a combined company apart in delivering edible oil solutions across all important segments of the global food industry. Bunge and Loders oils products will be found in almost all partially or fully prepared food products, and we’ll be able to deliver what customers want most: supply assurance, sustainability, traceability, innovations and applications knowledge and the ability to manage risk and provide cost-effective solutions on a global basis.”
Mr. Schroder called innovation “the lifeblood for growth” in the global food industry, and said it will be at the heart of Bunge’s strategy with Loders in the fold.
“Growth through innovation is a significant source of value creation as already evidenced in Loders’ successful history and in our own,” he said. “The combined business will have eight innovation centers globally, each specializing in a particular market segment. We will work with customers to help develop just the right application for them and inspire them with new ideas. Our combined innovation platform will draw on many years of global expertise, innovation and intellectual property rights. At the moment, Loders and Bunge combined have over 250 active co-development projects under way with key customers.”
In regions where Bunge and Loders overlap, the companies will become leaders across the five segments that make up the $78 billion B2B category: food processing, food service, bakery, confectionery and human nutrition. In other regions, the companies will extend their combined reach, such as to Brazil, Eastern Europe, Ukraine, Russia, Turkey, India and Mexico, Mr. Schroder said.
“Bunge’s presence in Brazil and Mexico milling is an excellent entry point for bakery in the ingredients, as is our large presence in Eastern Europe, Russia and Turkey for confectionery ingredients,” he noted. “These are very large markets with significant growth potential for the full range of products we can offer.”
Lastly, both Bunge and Loders intend to build on strong commitments to sustainability, Mr. Schroder said.“Loders brings to the combined company robust commitments and supplier engagement activities in palm, and we’ll base the palm sourcing policies of the combined company on them,” he said. “And Bunge is the leader in sustainability in oilseeds and grains, especially in South America. We have a well-developed corporate governance and disclosure and a proven track record of reducing the environmental footprint of our own operations. The combination of all these elements creates a strong sustainability program that will deliver to customers traceable, trustworthy supply and help advance industry progress across multiple value chains.”