Two of America's oldest agricultural companies laid the foundation for a new $30 billion-a-year ag and food colossus Monday with the announcement that Bunge Ltd. is buying Corn Products International Inc. in a $4.4 billion stock deal.
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.
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.
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.
Bunge, which was founded in 1818, has more than 25,000 employees in more than 30 countries