Corn Products rethinks acquisition by Bunge

06 November 2008

Corn reiner Corn Products yesterday said it has withdrawn management support for its $4.8-billion takeover by Bunge Ltd (See: Bunge to acquire Corn Products in $4.8-billion share swap deal), as the value of the share-swap deal had shrivelled by nearly two-thirds since it was announced in June this year. 

Including assumption of approximately $414 million of Corn Products' net debt, Bunge had offered $4.8 billion, which has been eroded to just about $1.72 billion, due to the economic slowdown and decline in crop prices that hit its profits by 33 per cent, leading to a 59-per cent drop in its share prices.

Unveiling its quarterly results in October, Bunge said it would delay a special shareholders' vote on the Corn Products acquisition December, because of the performance of both companies' stock.

Under the terms of the June agreement, approved by the boards of directors of both companies, Corn Products stockholders were to have received common shares of Bunge with a market value of $56.00 for each share of Corn Products common stock that they owned, subject to certain adjustments.

Following the closing of the transaction, Corn Products stockholders would have ownd approximately 21 per cent of the fully diluted shares of Bunge, the third-largest American agribusiness by revenue, behind Cargill and Archer Daniels Midland, but the world's biggest oilseed processor.

In a statement, Corn Products  said that it had notified Bunge on 4 November 2008 of its board of directors' intent to withdraw its recommendation in favour the previously announced merger agreement with Bunge.

According to the agreement the board of directors of Corn Products were free to withdraw or change its recommendation after giving at least five days notice to Bunge.