Bunge Taps Ex-Rival Boss to Take Helm Ahead of Possible Sale

12:45PM Jan 22, 2019

Bunge( Bunge )

(Bloomberg) -- Bunge Ltd. appointed the former head of a rival agricultural trading house as chief executive officer in a move that may revive talks of a sale of the 200-year-old firm.

Gregory Heckman was named as acting CEO to replace Soren Schroder, whose departure was announced last month. In a statement Tuesday, Bunge also issued a profit warning, citing Chinese soybean trade and lower Brazilian biofuel prices.

Heckman became a Bunge director last year as part of a board overhaul precipitated by activist investors. The new board commissioned a strategic review as the company struggles to navigate a years-long agricultural downturn that’s been exacerbated by the U.S.-China trade war.

While Schroder resisted approaches by suitors including Glencore Plc, the new board was said to be open to reengaging with both the Swiss giant as well as Archer-Daniels-Midland Co., a person familiar with the matter said last month.

Heckman’s appointment, albeit on an acting basis, may remove another hurdle to a resumption of talks with would-be buyers.

The 56-year-old headed Gavilon through the grain trader’s acquisition by Japanese giant Marubeni Corp., and has held senior executive roles at ConAgra Foods. He has previously envisaged a three-way tie-up between Gavilon, Bunge and the agriculture unit of Glencore, according to a person familiar with the matter. Bunge didn’t immediately respond to requests for comment.

In Tuesday’s announcement, the company said that three of its longest-serving board members, and also those close to the founding Born family -- L. Patrick Lupo, Enrique Boilini and Ernest Bachrach -- won’t stand for re-election at its annual meeting in May.

Heckman takes the helm just as White Plains, New York-based Bunge issues the latest in a series of guidance downgrades.

For full-year 2018, Bunge now estimates an agribusiness “shortfall” of $90 million to $100 million after Brazilian and U.S. soybean prices converged as China resumed some purchases of American-grown oilseed. Bunge is the world’s biggest soybean processor.

The firm also expects a shortfall of $60 million to $70 million in the sugar and bioenergy segment, compared to the low end of the previously disclosed ranges, mainly because of lower Brazilian ethanol prices.

Bunge is scheduled to report fourth-quarter earnings on Feb. 21. Its shares were down 1.9 percent at 1:36 p.m. in New York Tuesday. The stock has lost 37 percent in the past year.

The latest guidance cut may have hastened the board’s decision to install an interim CEO, said Seth Goldstein, an analyst at Morningstar Inc. in Chicago. Rival ADM has posted better-than-expected earnings during the trade war.

“It seems to be company specific,” Goldstein said. “Their peers have been able to use the trade war as an advantage, while Bunge seems to be having one problem after another.”


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