US food giants in $4.4bn tie-up

Food prices have shot up around the world

Two US agricultural firms are set to merge in a deal worth $4.4bn (£2.2bn) as they seek to benefit from rising crop prices.

Oilseed processor Bunge has agreed to buy rival Corn Products International for $56 a share.

The purchase will allow it to produce high-fructose corn syrup, a key ingredient used in Coca-Cola.

Rising demand for corn to produce food and clean fuel are some of the reasons why food prices are increasing sharply.

Companies that manufacture food products, such as Bunge and Corn Products International, are reaping the benefits of rising prices.

However, even they must pay more for basic ingredients and the hope is that a merger would save them between $100m and $120m a year.

"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," said Bunge chief executive and chairman Alberto Weisser.

Corn prices

After the deal is completed, Corn Products shareholders will own about 21% of Bunge's shares.

The combined company will have about 32,000 employees with operations in 40 countries.

Neither company expects to close any industrial facilities as a result of the transaction, Bunge said in a statement.

Corn prices have risen by more than 60% since the start of the year, partly as a result of the huge amount of damage to farmland caused by flooding in Iowa before the crucial growing season.