Cargill to buy Montedison's stake in Cerestar
Bloomberg News
Published Oct 31 2001
Cargill Inc., the largest U.S. agricultural company, agreed to
buy control of Cerestar from Montedison SpA in a plan that
values the maker of grain-based starches and sweeteners at
$1.13 billion.
Cargill will pay $29.73 a share for Montedison's 56 percent
stake, 59 percent more than Cerestar's share price before the
Sept. 26 announcement of talks between the two. Cargill will
assume $360.4 million in Cerestar debt and must bid for the
rest of the Paris-based company to comply with French law.
Cargill, supplier of only about 7 percent of European starches,
will take control of Cerestar's roughly 27 percent share and
might reduce capacity to boost prices, analysts said. Montedison
is selling Cerestar to focus on energy and to repay debts.
"When you have the removal of one of the contestants, you can
speculate that things might get better," said John Elston, an
analyst at WestLB Panmure in London. "It's an important
development in the industry."
Privately held Cerestar processes corn and wheat into food
ingredients such as high-fructose corn syrup, a sugar
alternative used in food.
Jonathan Steffen, a Cargill spokesman in Britain, declined to
say when the company anticipates the purchase will be
completed because it is subject to clearance from U.S. and
European regulators.
Cerestar shares rose $2.79, or 11 percent, to $27.97 in Paris,
their highest level for three months. It was the biggest one-day
gain since Sept. 26. Montedison's shares were suspended as the
company presented its strategy to analysts.
Cargill, with roots in grain trading and processing, is seeking to
expand its food businesses by developing specialty products such
as starches and related products.
Montedison's owners -- Fiat SpA, Electricite de France and
their partners -- bought the company for about $4.5 billion in
August. They want to sell assets such as businesses that make
sugar, olive oil and chemicals, to help cut debt that totaled
$7.05 billion at the end of June. That's two-thirds more than
the current market value of $4.23 billion.
Montedison, owner of Edison SpA, Italy's second-biggest
electric utility, agreed this month to sell its 51 percent stake in
Koipe SA, Spain's biggest olive oil producer, to Sos Cuetara SA
in a transaction that values Koipe at $373 million. Montedison
also plans to sell its chemicals unit, Ausimont.
Montedison said Tuesday that it will merge with its three
electricity and gas units, sell all other businesses and cut debt by
$2.16 billion to fund expansion and forge a bigger competitor
to Enel SpA, Italy's dominant utility.
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