October 27, 2008


Corn Products International posts 72 percent rise in Q3 earnings


Helped by strong industry pricing, Corn Products International Inc., has registered stronger-than-expected third-quarter earnings by 72 percent.


The Westchester corn-processing concern on Friday also reaffirmed its plans on a possible buyout by rival Bunge Ltd., though the value of the Bunge stock that Corn Products shareholders stand to receive has fallen by roughly two-thirds.


In the latest quarter, Corn Products had net income of US$88 million, or US$1.15 a diluted share, up sharply from the year-ago period's US$51 million, or 66 cents a share.


Sales climbed 24 percent, to US$1.08 billion from last year's US$877 million.


Corn Products results significantly topped the 78 cents a share Wall Street had been anticipating after beating forecasts by 37 cents a share. The company boosted its full-year earnings guidance by 25 cents -- essentially building in the third-quarter upside performance and marking down fourth-quarter expectations slightly -- to a US$3.40 to US$3.60 a share.


In June, Corn Products agreed to be acquired by Bunge in a stock-swap designed to yield Corn Products holders US$56 a share for each of their shares. But as the commodity-grain market weakened, so has Bunge's share price.


As of mid-morning Friday (October 24), Bunge shares were trading down 9.5 percent at US$34.03 -- a price that would provide Corn Products holders with just US$17.50 a share in Bunge stock.


Corn Products shares are trading Friday morning at US$20 apiece, well above the implied buyout price. That means the deal would not only provide Corn Product investors with a buyout premium, but would cost them money. Indeed, it suggests investors no longer expect a deal to go through: Corn Products investors are unlikely to tender shares for Bunge stock with a lower value.


Chairman and Chief Executive Sam Scott said the two companies are already engaged for integration. The meetings at which stockholders will be asked to approve the deal, earlier expected in November, will now be held in mid to late December, Scott noted.