updated 6/23/2008 10:59:33 AM ET 2008-06-23T14:59:33

Agriculture heavyweight Bunge Ltd. is buying Corn Products International Inc. in a $4.4 billion stock deal combining two of the nation’s oldest agricultural businesses.

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

The buyout will combine Westchester, Ill.-based Corn Products’ sweeteners, starches and other ingredients with White Plains, N.Y.-based Bunge’s portfolio of agribusiness, fertilizer, edible oil and milling products.

The global market for starches and sweeteners alone is growing at approximately 5 percent each year, and Corn Products has some of the biggest beer and food makers in the world as clients.

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

Shares of Corn Products rose $10.04, or 23.4 percent, to $52.94 in morning trading Monday whiloe Bunge shares fell $6.17, or 5.1 percent, to $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.

Once the deal closes, Corn Products stockholders will own about 21 percent 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 complementary 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.”

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

“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,” Scott said. “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.”

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 appealing diversification in crops and product lines. Bunge, she said, is undertaking it from a position of strength and Corn Products will benefit immediately.

“We have long believed that absent logistics and distribution and given its regional business model, Corn Products would struggle as an independent company,” she said in a note to investors. “This transaction gives the operation needed storage and infrastructure.”

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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