- Dubai Struggles to Ease Debt Fears; Investors Rattled
- US Dollar Falls to 14-Year Low Against the Yen
- US Companies Already Moving on Curbing Emissions
- Fannie Mae to Tighten Lending Standards: Report
- Investing in Good Karma – and Making a Profit
- Retailers Should Believe in Christmas Miracles
- Bankruptcies Jump, Hitting Highest Level in Four Years
- Steepest Black Friday Discounts, Revealed
- Lloyds Gets OK for Record $22.5 Billion Rights Issue
- 4 Thanksgiving Week Buys For Your Portfolio: Market Pros
- There's a 'Great Chance' For a Double-Dip Recession: Strategist
- Revenge of the Gangsta Nerds
- Will TCU See The "Flutie Effect?"
- Retail Earnings and Sales to Improve in Q4: Analyst
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
MOST SHARED
- Kuoni CEO Sees Recovery in Travel Sector
- Gold Retreats from Record High as Dollar Rebounds
- Dubai Struggles to Ease Debt Fears; Investors Rattled
- China Unveils Carbon Target Ahead of Copenhagen
- Euro Shares Record Biggest Drop in 7 Months
- US Markets Bracing for Selloff On Worries About Dubai's Debt
- Great Britain, No Longer That Great: Investor
- Fannie Mae to Tighten Lending Standards: Report
- Hyundai-Kia Targets Rapid China Growth in 2010
- Chinese Overcapacity is Worsening, EU Chamber Warns
Text Size 
Fertilizer producer and oilseed processor Bunge
 |
Matt Rourke / AP Corn prices in the United States have topped $7 per bushel this month, about double the levels of a year ago. |
Bunge, the No. 3 player in global agribusiness by revenue behind Cargill and Archer-Daniels-Midland [ADM
Loading...
()
], expects the transaction to lead to annual savings of $100 million to $120 million.
"Our first take is that this is a good deal for both companies," Citibank analyst David Driscoll said in a note to investors. "Corn Products gets a substantial premium to its prior closing price ... and Bunge uses its very strong stock as its currency to do the deal."
Shares of Corn Products [CPO
Loading...
()
] were up about 17 percent, while Bunge [BG
Loading...
()
] was down about 11 percent, reversing gains made earlier in the day.
The deal will also expand Bunge's operations in growth markets and diversify its sources of revenue with a "solid cash-flow business," Chief Executive Alberto Weisser said.
The acquisition should add to earnings by 2010 or late 2009, Weisser said on a conference call.
"I see there is some acceleration in growth," he said. "Now how this goes out in EPS and growth rates, I don't know."
Separately, Bunge raised its 2008 earnings forecast range by more than $2 a share, driven by strong demand for fertilizer and the continued strength in oilseed processing margins.
Soaring Corn Prices
The deal comes as ethanol production, as well as demand for food in developing economies such as India and China, is driving up prices for corn.
Corn prices in the United States have topped $7 per bushel this month, about double the levels of a year ago, as flooding in the Midwest has wiped out wide swathes of agricultural production.
The deal is valued at $4.8 billion, including about $414 million of Corn Products' net debt.
Stockholders of Corn Products, which has leading market shares in South America, Mexico, Canada and Pakistan, will own about 21 percent of Bunge once the deal closes.
The combined company will have about 32,000 employees and operate in 40 countries. Neither company expects to close any industrial facilities as a result of the transaction, Bunge said.
Bunge said it now expected 2008 earnings per share of $9.35 to $9.65, up from a prior outlook of $7.10 to $7.40. That does not reflect the acquisition, which the company expects to close in the fourth quarter.
Analysts had been expecting Bunge to earn $7.59 a share in 2008, according to Reuters Estimates.
"We continue to benefit from good fundamentals in our core markets," Chief Financial Officer Jacqualyn Fouse said in a statement. "Despite the higher commodity prices, customer demand has been firm."
Still, she said, high prices created challenges in food production, and "prudent management of working capital and risk" would be essential in coming months.
Bunge, based in White Plains, New York, has more than 25,000 employees.
Westchester, Illinois-based Corn Products provides corn syrup to beverage makers like Coca-Cola
Credit Suisse Securities (USA) and Morgan Stanley and Co are Bunge's financial advisers in the deal. Lazard is Corn Products's financial adviser.
Print
Email
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
- Ever wished your cab driver would stop nattering and just get to where you're going? Well that moment is near(er).
- Eric Schmidt pledges to create a virtual copy of the Iraq National Museum at Google’s expense.
- Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
- More shoppers than ever plan to comparison-shop this season. Who will benefit?
- It may be the most unusual guide to business you'll read.
Data is a real-time snapshot *Data is delayed at least 15 minutes