Corn Products to Buy National Starch

Darlington Musarurwa
21 Jun, 2010
New York City

Corn Products agrees to acquire National Starch from AkzoNobel for $1.3 billion in cash. The transaction is projected to generate cost synergies of at least $50 million.

[R]12:00 PM New York – Corn Products agrees to acquire National Starch from AkzoNobel for $1.3 billion in cash. The transaction is projected to generate cost synergies of at least $50 million.[/R]

Corn Products International, Inc., the agriculturally derived ingredients provider said today that it has entered into an agreement to acquire specialty starch business National Starch from the Netherlands-based coatings and specialty chemicals company Akzo Nobel NV for $1.3 billion in cash. The deal is expected to close in the third quarter of 2010, subject to regulatory approvals.

Akzo Nobel noted that the buyer will also assume certain pension and employee benefit liabilities.

The acquisition, which has been approved by the Boards of both Corn Products and Akzo Nobel, would create an ingredient solutions leader with nearly $5 billion in revenues. Westchester, Illinois-based Corn Products expects the deal also gives it access to new markets such as Europe and Asia-Pacific.

National Starch, a New Jersey-based specialty starches provider, was taken over by Akzo Nobel as part of its acquisition of Imperial Chemical Industries Plc, in January 2008. Akzo Nobel decided to sell the unit after its Board concluded that National Starch did not offer sufficient opportunity to create value within the company''s transformed coatings and specialty chemicals portfolio.

According to Corn Products, specialty and modified starches, two ingredient solutions the company has identified as important to its ongoing growth, have been developed by National Starch. Corn Products expects that its offerings would be broadened by National Starch''s ingredient solutions, such as texturants, blends and environmentally """"green"""" solutions.

The company expects to finance the deal through cash, debt and new equity, and projects significant production efficiencies and cost synergies from the deal. On a cash basis, the acquisition is expected to be accretive to Corn Products by the end of 2011.

The transaction is also projected to generate cost synergies of at least $50 million, mainly from efficiencies in the areas of manufacturing, procurement, logistics and general & administrative functions.

Commenting on the acquisition, Ilene Gordon, Chairman, President and Chief Executive Officer of Corn Products, said, """"The acquisition aligns with our strategic priorities to grow our ingredient portfolio, increase our presence in priority food processing segments, enter new markets, and develop innovative solutions that better serve our customers.""""

Akzo Nobel''s Chief Executive Officer Hans Wijers commented, """"This transaction today marks the strong focus on our core business and confirms Akzo Nobel''s transformation into the world''s largest global coatings and specialty chemicals company.""""

In the transaction, J.P. Morgan Securities Inc. acted as exclusive financial advisor to Corn Products.

Corn Products International, Inc., ((CPO)) fell $0.20 or 0.57%, and closed Friday''s regular trading session at $34.85 on a volume of 436,227 shares. In the past 52 weeks, shares have been trading between $24.15 and $37.62.

Akzo Nobel NV ((AKZOY.PK)) rose $0.28 to close at $55.58 on Friday.