Bunge to buy Corn Products for $4.4 billion

CHICAGO (Reuters) - Fertilizer producer and oilseed processor Bunge Ltd said on Monday it would buy Corn Products International Inc (CPO.N: Quote, Profile, Research, Stock Buzz) for $4.4 billion to gain a leading position in corn-based starches and sweeteners.

The deal comes at a time of record grain prices and will give Bunge, a dominant player in South America, a stronger position in North America as it supplies some of the largest U.S. food and beverage companies such as Coca-Cola Co (KO.N: Quote, Profile, Research, Stock Buzz) and Kellogg Co (K.N: Quote, Profile, Research, Stock Buzz).

The deal calls for the exchange of one share of Corn Products for $56 in Bunge stock, a 31 percent premium to the company's closing price of $42.90 on Friday.

Bunge, the No. 3 player in global agribusiness by revenue behind Cargill Inc CARG.UL and Archer Daniels Midland Co (ADM.N: Quote, Profile, Research, Stock Buzz), 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, headquartered in the Chicago suburb of Westchester, Illinois, jumped as much as 28 percent to $54.96, while Bunge, based in White Plains, New York, fell 11 percent to $109.

"It's part of our strategy to expand into complementary value chains," Bunge Chief Executive Alberto Weisser told Reuters. "We started a tentative alliance in Brazil, selling Bunge products through Corn Products and corn products through Bunge. It's working extremely well."

The acquisition should add to earnings by 2010 or late 2009, Weisser said on a conference call.

Separately, Bunge raised its 2008 earnings forecast range by more than $2 a share, driven by strong demand for fertilizer and continued strength in oilseed processing margins.