* Glencore said it had made informal approach to Bunge
* Deal would be positive for Glencore profile, says analyst
* Glencore would be likely to keep Baa2 rating (Adds Moody’s comments, details of a possible deal)
By Barbara Lewis
LONDON, May 26 (Reuters) - Miner and trader Glencore may pay up to $6 billion in cash in a possible tie-up with U.S. grains trader Bunge based on current valuations, Moody’s ratings agency said on Friday, but said it did not expect an outright acquisition.
Glencore said this week it had made an informal approach to discuss “a possible consensual business combination”, but offered few details about what that would involve. Bunge said it was not in talks with Glencore.
Glencore CEO Ivan Glasenberg said his company wanted to expand its agriculture business via Glencore Agriculture, which is a partnership between the London-listed mining company and two Canadian funds.
“Should the transaction happen, we think the most likely combination would be between Glencore Agriculture Limited and Bunge, with Glencore maintaining a sizeable stake of up to 50 percent in the combined entity,” Elena Nadtotchi, vice president and lead analyst for Glencore at Moody‘s, said in a statement.
“We estimate this could require a cash contribution of up to $6 billion from Glencore, assuming current valuations,” she said, adding Glencore would still remain within Moody’s guidance for the agency’s investment grade Baa2 rating.
A combination involving Glencore Agriculture would be positive for Glencore’s business profile, Nadtotchi said.
But she said an outright acquisition of Bunge by Glencore or a deal that would significantly dilute Glencore’s stake in the combined group was unlikely.
“A scenario where a combination happens at the level of (Glencore Agriculture) and Glencore maintains a substantial stake of up to 50 percent in the enlarged group is more in line with Glencore’s strategy and previous deals,” she said. (Editing by Edmund Blair)