White Plains, N.Y. and Westchester, Ill., June 23 - Bunge Limited and Corn Products International, Inc. today announced that they have entered into a definitive agreement in which Bunge will acquire Corn Products in an all-stock transaction. The aggregate transaction value is approximately $4.8 billion, including assumption of approximately $414 million of Corn Products' net debt.
Under the terms of the agreement, approved by the Boards of Directors of both companies, Corn Products stockholders will receive common shares of Bunge with a market value of $56.00 for each share of Corn Products common stock that they own, subject to adjustment as described below. Following the closing of the transaction, Corn Products stockholders will own approximately 21% of Bunge's fully diluted shares.
"Combining with Corn Products provides a unique opportunity for Bunge to establish an integrated, global presence in the corn value chain, which is highly complementary to our existing operations," stated Alberto Weisser, Bunge Limited's Chairman and Chief Executive Officer. "Corn Products is the leading pure-play franchise in corn refining and will add higher-margin starch and sweetener products to Bunge's product portfolio, expand our operations in important growth markets, and diversify our revenue stream with a solid cash flow business."
Sam Scott, Chairman, President and Chief Executive Officer of Corn Products International, said, "I am excited by this combination. It represents a terrific opportunity to create value for our stockholders, enhance opportunities for our employees and provide benefits to our global partners and customers. Our stockholders will have an ongoing equity interest in a combined company that is well-positioned to serve customers around the world with a broad product portfolio, integrated distribution network and innovative products."
Upon closing of the transaction, Corn Products will become a wholly owned subsidiary of Bunge, and Mr. Scott will join Bunge's Board of Directors.
Commercial, Geographic and Operational Opportunities
The combination of Bunge and Corn Products will create a larger, more diversified and competitive global provider of agribusiness and food products.
-- Enhanced product portfolio: By adding Corn Products' value-added sweeteners, starches and other ingredients to Bunge's portfolio of agribusiness, fertilizer, edible oil and milling products, the combined company will be well positioned to serve growing global demand for a broad array of agribusiness and food products. The global market for sweeteners and starches is growing at approximately 5% per year.
-- Stronger presence in attractive geographies: The combination brings together the companies' established strengths in core geographies, including the U.S., Brazil and Argentina. It also provides opportunities to build on each other's asset networks to expand in high growth geographies, such as China, Mexico, India, South America, Southeast Asia and Africa.
-- Complementary customer bases: By creating common and more efficient distribution channels and improved sales and product development capabilities, the combined company will be able to increase its presence in shared customer segments, such as processed food, bakery, animal feed and brewing, while serving a larger and more diverse set of customers overall.
-- Financially compelling: Bunge expects to achieve estimated annual cost synergies and incremental profit opportunities of $100 million to $120 million, including savings in areas such as procurement, logistics and elimination of duplicate costs. Additionally, the all-stock transaction strengthens the company's balance sheet for future growth.
Mr. Weisser continued: "Corn Products has all the right elements -- a culture that mirrors Bunge's, a rich heritage of providing high quality products, proven financial success and a customer-focused mindset. We look forward to welcoming Corn Products' talented global team to Bunge and working together to create value for our shareholders, customers and employees."
After the combination of Bunge's and Corn Products' global operations, Bunge will have approximately 32,000 employees and operations in 40 countries. Neither company expects the closure of any industrial facilities as a result of this transaction. Following the closing, Corn Products will maintain its operational headquarters in Westchester, Ill., continue its ongoing commitments to the local communities in which it operates and continue to use the Corn Products brand name.
In 2007, Bunge reported net income of $778 million and generated total segment EBIT of $1,230 million. During the same period, Corn Products reported net income of $198 million and operating income of $347 million.
Separately, today Bunge also announced an increase in its 2008 annual earnings guidance.
Transaction Details
Under the terms of the agreement, each share of Corn Products common stock will be exchanged for a fraction of a common share of Bunge determined by dividing $56.00 by the volume weighted average closing price of a Bunge common share on the New York Stock Exchange for the 15 trading days ending on the second trading day prior to the date of the Corn Products stockholders meeting, provided that if this average closing price is equal to or greater than $133.10, each share of Corn Products common stock will be exchanged for 0.4207 of a Bunge common share, and if this average closing price is equal to or less than $108.90, each share of Corn Products common stock will be exchanged for 0.5142 of a Bunge common share.
The exchange of shares in the transaction is expected to qualify as a tax- free reorganization, allowing Corn Products stockholders to defer any gain on their shares for U.S. income tax purposes.
The transaction is expected to close in the fourth quarter of 2008 and is subject to the satisfaction of customary closing conditions, including receipt of regulatory clearances, as well as approval by the shareholders of both companies.
Credit Suisse Securities (USA) LLC and Morgan Stanley and Co. Incorporated are acting as financial advisors to Bunge and Shearman & Sterling LLP is serving as legal advisor. Lazard is acting as financial advisor to Corn Products, and Sidley Austin LLP is serving as legal advisor. J.P. Morgan Securities Inc. also provided a fairness opinion to the Board of Corn Products.