Bunge merger under threat after CPI withdraws support

By By Sarah Hills

- Last updated on GMT

Related tags: Starch, Corn syrup, High-fructose corn syrup

The merger agreement between Bunge and Corn Products International has been thrown into turmoil as CPI’s board has withdrawn its support for the $4.8bn deal.

Corn Products International (CPI) said it notified Bunge Limited yesterday of its Board of Directors’ intent to withdraw its recommendation in favor of adoption of the previously announced merger agreement with Bunge, and recommend against adoption of the merger agreement.

Following the notification of the board’s decision, Bunge said it was disappointed but the company would stand its ground as it has no intention of revising the terms.

If CPI withdraws or changes its recommendation of the merger, Bunge will have the right to require CPI to hold a meeting of its stockholders to vote on the adoption of the merger agreement or to terminate the merger agreement. Bunge could then seek reimbursement from CPI for up to $10m of expenses related to the merger.

CPI said in a statement: “Pursuant to the merger agreement, which will remain in effect until terminated in accordance with its terms, the Board of Directors of Corn Products may withdraw or change its recommendation to adopt the merger agreement following at least five days notice to Bunge.”

In response to the notification, Alberto Weisser, Bunge's chairman and Chief Executive Officer, said: “We are disappointed by the Corn Products Board's decision.

"Despite the effect of unprecedented turmoil in the equity markets on our companies' stocks, Bunge's Board of Directors and management continue to believe a merger with Corn Products as currently structured would deliver significant value over the long-term to shareholders, employees and customers of both organizations.

“Consequently, we have no intention of revising the terms of the transaction. We intend to evaluate carefully, with the best interests of Bunge's shareholders in mind, our options of either terminating the agreement or proceeding to shareholder votes under the existing agreement.”

Bunge added that it expects to announce its intended course of action promptly.

Joining forces

In June it was announced that Bunge had signed a definitive agreement to acquire CPI, one of the world's major suppliers of dextrose, and a big regional player in starch, high fructose corn syrup, and glucose, for around $4.8bn.

Mark Lindley, spokesman for CPI, said at the time that the merger would provide CPI with a wider product portfolio and gives the business access to regions and geographies it was not currently now, predominantly Europe.

Bunge currently has activities in edible oils, milling products, fertilizer and other agribusiness. By buying Corn Products, it was to extend its portfolio of ingredients to higher value sweeteners and starches, at a time when the global market for these kinds of products is growing by around five per cent per year.

In April CPI added a stevia-derived sweetener to its line, when it signed an exclusive license agreement with Japan's Morita Kagaku Kogyo Company Ltd for its patented stevia strain, sold under the brand Enliten.

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