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Bunge
To Acquire Corn Products International in $4.8 Million Deal
White Plains, NY and Westchester, IL—Bunge
Limited (NYSE:BG) and Corn
Products International, Inc. (NYSE:CPO) announced June 23 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 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.
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,
IL, 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, Bunge
also announced June 23 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. Inc. 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.
For more information,
call 914-684-3398.
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