Corn Products In Bedford Pk. Is Purchased
The planned acquisition of Corn Products International Inc. by Bunge Ltd. that was announced June 23 is not expected to mean any immediate job cuts or changes at the CPI plant that has been in Bedford Park for 100 years.
As David Prichard, a spokesman for Westchester-based Corn Products, said Friday, the acquisition will be an all-stock transaction with an aggregate value of approximately $4.8 billion, including assumption of about $414 million of Corn Products’ net debt.
“When it is completed, Corn Products will retain its name as a division of Bunge,” he explained.
He said the Bedford Park facility is the company’s “premiere” facility, employing about 400 people, and “can look forward to a bright future.”
“These are two companies with very long histories, and Bunge obviously values what Corn Products does there, so why would they want to change it,” he said.
While Bunge is a fertilizer and oilseed processor, CPI is a worldwide leader in the “corn wet milling” process used to make sweeteners such as high-fructose corn syrup, with 34 plants in countries from Canada to Pakistan.
Both companies have a worldwide presence, but in different countries, so the merger is described as mutually beneficial.
Prichard said the combined company should be well-positioned to serve growing global demand for a broad array of agribusiness and food products.
The global market for the sweeteners and starches that CPI makes is growing at approximately five percent per year. Therefore, neither company expects to close industrial facilities due to the merger.
Bunge will have approximately 32,000 employees and operations in 40 countries when the deal is completed, probably sometime this fall.
Corn Products will remain headquartered in Westchester, where more than 200 people work, and keep the brand name and local commitments.
According to the agreement, CPI stockholders will also receive common shares of Bunge with a market value of $56 for each share of Corn Products common stock that they own, subject to adjustments. Corn Products stockholders will own approximately 21 percent of Bunge’s fully diluted shares.
“There will be job cuts to eliminate some duplication of services,” said Prichard. “But Bunge obviously values the products Corn Products is making, so little is expected to change.”
CPI stock closed at 48.76 on Friday, up slightly from the day before, and Bunge said that was good considering that the overall market dropped last week.
The chairmen and CEOs of both companies issued statements praising the merger, saying the companies complement each other.
lt allows Bunge “to establish an integrated, global presence in the corn value chain, which is highly complementary to our existing operations,” said Alberto Weisser, Bunge chairman and CEO. “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 CEO of Corn Products, 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 completion of the transaction, Corn Products will become a wholly owned subsidiary of Bunge, and Scott will join Bunge’s board of directors.
Bunge expects to save an estimated $100 million to $120 million in profits, following the merger, due to savings in areas such as procurement, logistics and elimination of duplicate costs.
And the all-stock transaction strengthens the company’s balance sheet for future growth.
Weisser said Corn Products has “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.”
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 using a formula tied to the current stock value
After fluctuating all week, the price of Bunge stock last Friday was $106.17, up slightly from the day before.
“We are telling employees we don’t have all the answers because we are only five days into the announcement,” he said. “But we are keeping the lines of communication open.”