DuPont to Acquire Danisco for $6.3 Billion
Danisco has specialty food ingredients, including enablers, cultures and sweeteners, that generate about 65 percent of total sales; and Genencor, its enzymes division, represents 35 percent of total sales.
1/10/2011 --- DuPont has entered into a definitive agreement for the acquisition of Danisco for $5.8 billion in cash and assumption of $500 million of Danisco net debt. Danisco produces specialty food ingredients, including enablers, cultures and sweeteners, that generate about 65 percent of its total sales. Genencor, its enzymes division, represents 35 percent of total sales.
DuPont will pay 665 kroner ($115) a share for Danisco, which is 25 percent more than Danisco’s all-time high 530-krone Jan. 7 closing share price, as well as assuming $500 million of debt. Danisco will be the largest takeover by DuPont since it bought genetically modified seed-maker Pioneer Hi-Bred International Inc. for $7.7 billion in 1999.
Upon closing, this transaction would establish DuPont as a clear leader in industrial biotechnology with science-intensive innovations that address global challenges in food production and reduced fossil fuel consumption.
Danisco CEO Tom Knutzen (pictured) told a press conference that “We have complementary businesses and the technologies fit together with minimal overlap. We see this as an opportunity for significant growth.”
Company Chairman Jørgen Tandrup said that the binding offer was completed last night at 11pm, following a process of “some months.” Several bids were considered with no details revealed on the specific companies involved. “We were first contacted several months ago and up to last night there were still bidders. Dupont offered the best price, probably because they also believed they had the best fit.” As yet, there were no specific details revealed about whether the merger would lead to redundancies in Denmark. Knutzen had said that “in terms of integration it is early days, but it will attract bigger and positive career opportunities for employees.”
Danisco noted that the price is a premium of 33% to last month's average share price and a premium of 90% to the share price 12 months ago. An offer period of 4 weeks exists unless extended in accordance with law. Shareholder acceptance of 90% is required. Necessary approvals and clearances from the relevant competition authorities need to be obtained, but the Danisco board is confident as there is "minimal overlap" between the companies.
Danisco stated that the merger will lead to significant growth opportunities in industrial biotechnology as well as developing a more comprehensive offering for the food industry.
• Danisco's strong position in enzymes and fermentation complements DuPont's capabilities in biomass processing and microbe engineering, which will be part of creating cost effective biofuels and biomaterials.
• Danisco has been a valued partner in Dupont's cellulosic ethanol program and a technology development partner in a commercially successful bio-propanediol business.
• Danisco's premier position in specialty food ingredients complements DuPont's existing nutriton & helath activities.
• Danisco's Sales and Application development global organization will strengthen DuPont's route to markets in different food applications.
Danisco, while best known as a maker of food ingredients, is also one of Denmark's two global leaders in the emerging biofuel sector, using specially engineered enzymes rather than corn or sugar to make fuel.
DuPont and Danisco are already joint venture partners in developing technology for second-generation bioethanol -- biofuel made from non-food crops -- which is seen with growth potential as the United States seeks to wean itself off imported fossil fuels. Danisco has called it a $75 billion market.
The deal merges two very old companies. DuPont was founded in 1802 and Danisco traces its roots back to 1872 and the founding of Danish Sugar.
“Danisco is a premier company, a long-time successful partner of DuPont and a proven innovator committed to sustainable growth,” said DuPont Chair and CEO Ellen Kullman. “Danisco has attractive, market-driven science businesses that offer clear synergies with DuPont Nutrition & Health and Applied BioSciences.”
“This transaction is a perfect strategic fit with our growth opportunities and will help us solve global challenges presented by dramatic population growth in the decades to come, specifically related to food and energy. In addition, biotechnology and specialty food ingredients have the potential to change the landscape of industries, such as substituting renewable materials for fossil fuel processes and addressing food needs in developing economies, that will generate more sustainable solutions and create growth for the company,” Kullman said.
The acquisition is expected to be financed with about $3 billion in existing cash and the remainder in debt. The transaction is expected to close early in the second quarter and be cash and earnings accretive in 2012, the first full year of the combined entity.
DuPont has set its 2011 earnings per share outlook at a range of $3.30 to $3.60 per share. The anticipated impact of this transaction would reduce that outlook by $.30 to $.45 per share on a reported basis.
“Danisco has two well-positioned global businesses that strongly complement our current biotechnology capabilities, R&D pipeline, and specialty food ingredients, a combination that offers attractive long-term financial returns. This also would create new opportunities across other parts of the DuPont portfolio, including traditional materials science offerings,” said Kullman.
Danisco is a leading technology-driven organization, with outstanding research and application development capabilities. Danisco has nearly 7,000 employees globally with operations in 23 countries.
The acquisition is to be effected through a public tender offer by a subsidiary of DuPont for all of Danisco's outstanding shares at a price of DKK 665 in cash per share. Danisco has stated its intention to recommend the offer to its shareholders subject to and upon publication of the Offer Document relating to the tender offer following review by the Danish Financial Supervisory Authority. The transaction is subject to customary closing conditions, including certain regulatory approvals and the tender of more than 90 percent of the Danisco shares in the tender offer. DuPont has the right to waive such tender offer conditions and accept a lesser number of shares in certain cases.
by Robin Wyers
