Agriculture heavyweight Bunge Limited is buying Corn Products International Inc in a US$4.4 billion stock deal combining two of the oldest United States agricultural businesses.

Bunge will also assume US$414 million of Corn Products' debt under the deal announced Monday by the two companies. Corn Products shares climbed almost 24 per cent.

The buyout will combine Westchester, Illinois-based Corn Products' sweeteners, starches and other ingredients with White Plains, New York-based Bunge's portfolio of agribusiness, fertiliser, edible oil and milling products.

The global market for starches and sweeteners alone is growing at approximately five per cent each year, and Corn Products has some of the biggest beer and food makers in the world as clients.

Rising share prices

Corn Products shareholders will get Bunge stock worth US$56 for each Corn Products share under terms of the deal, a 31 per cent premium to Corn Products' closing share price of US$42.90 on Friday.

Shares of Corn Products rose US$10.04, or 23.4 per cent, to US$52.94 in morning trading Monday, while Bunge shares fell US$6.17, or 5.1 per cent, to US$116.

The deal has been approved by the boards of the two companies, and is expected to close in the fourth quarter subject to approval by regulators and shareholders of both companies.

Establish global presence

Once the deal closes, Corn Products stockholders will own about 21 per cent of the enlarged Bunge.

"Combining with Corn Products provides a unique opportunity for Bunge to establish an integrated, global presence in the corn value chain, which is highly comple-mentary to our existing operations," Alberto Weisser, Bunge Limited's chairman and chief executive officer, said in a statement.

"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."

Excited by merger

Sam Scott, chairman, president and chief executive officer of Corn Products International, said in a statement that he is excited by the merger.

"It represents a terrific opportunity to create value for our stockholders, enhance oppor-tunities for our employees and provide benefits to our global partners and customers," Scott said. "Our stock-holders 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 distri-bution network and innovative products."

Bunge, founded in 1818, has more than 25,000 employees in more than 30 countries.

Corn Products will maintain its operational headquarters in Westchester, a suburb west of Chicago. It has operations in 15 countries at 34 plants, including wholly owned businesses, affiliates and alliances.

Deutsche Bank analyst Christina McGlone said the combination offers are appealing in diversification in crops and product lines.