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Bunge Agrees to Buy Corn Products for $4.2 Billion

by Mark Herlihy and Choy Leng Yeong
Bloomberg
Bunge Ltd., the world’s largest oilseed processor, agreed to buy Corn Products International Inc. for $4.2 billion in stock to add corn-based sweeteners as demand increases for soft drinks and processed foods in China and India.

Bunge will pay the equivalent of $56 for each share of Corn Products, White Plains, New York-based Bunge said today in a statement. That’s 31 percent more than Westchester, Illinois- based Corn Products’ closing price of $42.90 on June 20. Bunge also will assume about $414 million of Corn Products’ debt.

Bunge Chief Executive Officer Alberto Weisser, 52, will gain refining operations that sell high-fructose corn syrup and food additives to customers including Coca-Cola Co. and PepsiCo Inc. The addition gives Bunge a portfolio of projects similar to U.S. competitor ADM, which derived 35 percent of its operating profit from corn processing last year.

“Bunge will become a more formidable competitor in global grain processing by broadening the products it sells to customers, strengthening customer relationships, driving down costs by combining logistics and risk management, and extending Bunge’s reach into new markets,” Credit Suisse analyst Robert Moskow said today in a note.

Corn Products is the fourth-largest maker of high-fructose corn syrup in the U.S. and will give Bunge new customers in Pakistan, South Korea and Thailand, Moskow said.

Bunge fell $5.87, or 4.8 percent, to $116.30 as of 10:35 a.m. in New York Stock Exchange composite trading. The shares had risen 4.9 percent this year through June 20. Corn Products rose $9.99, or 23 percent, to $52.89. The stock had risen 17 percent this year through June 20.

Corn Refining

Corn Products, led by CEO Samuel Scott, 64, was established in 1906 through a combination of U.S. corn-refining companies. The company processes corn in South America and has operations in Asia and Africa. In April, the company said first-quarter profit advanced 29 percent to $64.3 million.

Bunge, established in 1818 as an import and export firm in Amsterdam, moved its headquarters to White Plains, New York, in 1999. Its shares traded for the first time on the New York Stock Exchange in 2001. Weisser paid $1.55 billion in 2002 for control of French vegetable-oil maker Cereol SA, and has since added crushing and refining assets.

First-quarter profit surged more than 20-fold to $289 million as record grain prices boosted demand for crop nutrients and distribution services, Bunge said in April.

Corn prices have doubled in the past year because of rising demand to produce ethanol and feed livestock. The World Bank has said 33 countries may face unrest because of surging food costs and deepening poverty.

Bunge said in a separate statement it raised its earnings- per-share forecast for this year to a range of $9.35 to $9.65, from $7.10 to $7.40.

The value of the offer was calculated using the 74.12 million shares of Corn Products outstanding as of April 30, according to data compiled by Bloomberg.

Credit Suisse is advising Bunge on the deal.

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