Corn Products to withdraw Bunge merger agreement

by Eric Schroeder
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WESTCHESTER, ILL. — The board of directors of Corn Products International Inc. today said it plans to withdraw its recommendation to be merged with White Plains, N.Y.-based Bunge Ltd.

Under terms of the agreement first announced in mid-June, Corn Products has the right to withdraw or change its recommendation to adopt the merger agreement following at least five days notice to Bunge.

If Corn Products opts to take either of those steps, Bunge then has the right to require that Corn Products hold a meeting of its shareholders to vote on the adoption of the merger agreement or to terminate the merger agreement and seek reimbursement from Corn Products for up to $10 million of Bunge’s expenses in connection with the merger.

The possibility that roadblocks may exist in the proposed merger came to the fore on Oct. 23, when Bunge reported a third-quarter earnings decline of 33%. In connection with its sluggish earnings, Bunge said the company, along with Corn Products, had agreed to push back their special shareholders meetings to vote on their proposed merger until mid-to-late December.

Both companies’ stock prices have been in a slide since the merger agreement was announced. Bunge’s share price closed at $110.70 on June 23, the day the merger was announced, while Corn Products closed at $42.90. Bunge’s share price opened at $45.31 today, down 59%, while Corn Products opened at $25.40, down 41%.

"We are disappointed by the Corn Products board’s decision," said Alberto Weisser, chairman and chief executive officer of Bunge. "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."

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