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.