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Potential Shake-Up at Top-Four Agribusiness Player is One to Watch

A series of poor earnings, the abrupt retirement of chief trader Brian Thomsen, and unsuccessful takeover approaches in the past have all prompted a strategic review (announced in October 2018) at Bunge Ltd (BG), one of the top four players in the agribusiness and food industry. Other factors at play include the presence of activist investors Continental Grain Co. and DE Shaw, a new CEO and added directors, a string of insider purchases, and a potential separation on the table.

What's Interesting? The Edge Intelligence...
Following its October 2018 announcement of a strategic review, we examined Bunge Ltd (BG) for which of its five segments made the most sense for separation, and found there are several other elements to this situation, including:
CEO forced to step down;
Activist investors known for creating value;
Takeover target in the past;
"ABCD" peer currently mulling over a Spinoff;
Bioenergy Joint Venture with BP Plc in Brazil;
Strategic stake in Beyond Meat adding value to the bottom-line;
Insiders purchase shares post-earnings and ahead of an announcement;
Poor operating performance warrants a Spinoff or sale;

The Edge View...
Sugar exit will create value for core business: BG’s core segment Agribusiness (~70% of FY18’s revenues and ~65% of FY18’s EBITDA) has been performing well for BG, but poor performance by the Sugar division is putting pressure on BG’s overall bottom-line. By Spinning off the Sugar business, the additional resources generated can be utilized by BG to concentrate on its core business. A hike in its dividend or a share buyback program can also be a rewarding possibility for investors.