Ag products biz Bunge buying Corn Products for $4.4B

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While neither boasts a brand name universally known to consumers, the combination will vault White Plains, N.Y.-based Bunge into the Fortune 100 by adding Corn Products' sweeteners, starches and other ingredients to its portfolio of agribusiness, fertilizer, edible oil and milling products.

Bunge, which also agreed to assume $414 million of Corn Products' debt as part of the deal, hopes the acquisition will help provide a buffer against volatile commodity prices by branching into another area as well as a healthy cash flow.

The global market for starches and sweeteners alone is growing about 5 percent each year, and Corn Products has some of the biggest beer and food makers in the world as clients.

"Both of us look at this as an ag and food company," Sam Scott, chairman, president and CEO of Westchester, Ill.-based Corn Products International, said in an interview.

The news sent the companies' stocks in opposite directions. Shares of Corn Products rose $7.85, or 18.3 percent, to $50.75 after reaching a 52-week high of $54.96 earlier in the session. Bunge shares fell $11.47, or 9.4 percent, to $110.70, although remaining up more than 30 percent from a year ago.

Corn Products shareholders will get Bunge stock worth $56 for each Corn Products share under terms of the deal, a 31 percent premium to Corn Products' closing share price of $42.90 on Friday.

The deal has been approved by the boards of the two companies, and is expected to close in the fourth quarter subject to approval by regulators and shareholders of both companies.

Once it closes, Corn Products stockholders will own about 21 percent of the enlarged Bunge.

The world's leading oilseed processing company and one of the top sellers of bottled vegetable oils worldwide, Bunge is currently No. 255 on Fortune's list of largest U.S. companies with $26.3 billion in revenues last year. But as a middleman in the food chain, it has little control over the pricing of the products it buys and sells.

Alberto Weisser, Bunge's chairman and chief executive officer, said the combination offers Bunge a chance to establish a global presence in the corn value chain, which complements its own operations.

"We believe that being present in more chains, overall there's going to be less volatility on the earnings," Weisser said in an interview.

Bunge, which was founded in 1818, has more than 25,000 employees in more than 30 countries

Corn Products, founded in a 1906 merger of leading corn refiners, will become a subsidiary of Bunge while maintaining its operational headquarters in Westchester, 10 miles west of Chicago. The company has operations in 15 countries at 34 plants, including wholly owned businesses, affiliates and alliances. Its $3.4 billion in 2007 revenues last year ranked it 616th among U.S. corporations.

Deutsche Bank analyst Christina McGlone said the combination offers appealing diversification in crops and product lines. Bunge, she said, is undertaking it from a position of strength and Corn Products will benefit immediately.

"We have long believed that absent logistics and distribution and given its regional business model, Corn Products would struggle as an independent company," she said in a note to investors. "This transaction gives the operation needed storage and infrastructure."