Commodities giant Glencore has confirmed that its agricultural unit has approached US food firm Bunge for a potential tie-up that would create one of the industry's largest players.
The Anglo-Swiss firm issued a statement following media speculation over a potential deal, though Bunge later clarified that it had not engaged in any merger talks with Glencore's unit.
Glencore said: "Glencore confirms that Glencore Agriculture Limited (GAL) ... has made an informal approach to Bunge Limited regarding a possible consensual business combination.
"Following this informal approach from GAL, discussions may or may not materialise and there is no certainty that any transaction will occur."
In its own follow-up statement, Bunge said it is "not engaged in business combination discussions" adding it was "committed" to pursuing its current global strategy.
Ben Davis, an analyst at Liberum, said that the move was a sign that Glencore has renewed plans for "rapid expansion".
He explained that agriculture has been an area of interest for Glencore, given that it can offer better margins than its oil and metals operations.
Meanwhile, "Bunge, has been open to offers because margins have been depressed (because of structural issues such as increased transparency and regulation etc and also seasonal bumper crops) with Q1 profits down 80%, and believe consolidation in the space is the only way forward".
Mr Davis added: "Glencore typically goes for only hard assets and chooses to expand the actual trading division organically, so any sort of tie-up will likely result in many job losses for Bunge, hence providing synergies."
Glencore shares were down 0.6% in morning trading as its annual general meeting got under way in Cham, Switzerland.