DuPont’s Danisco Deal Not a Threat to Novozymes, Analysts Say
DuPont Co.’s plan to buy Danish enzyme maker Danisco A/S is a vote of confidence in the biofuels industry and is unlikely to threaten the market share of Novozymes A/S, analysts said.
The $5.8 billion deal, announced yesterday, shows that “the technology for second- and third-generation bioethanol enzymes is now closer to full commercial exploitation," Andy Smith, head of global consumer equity research in London at MF Global, said in an e-mail today.
That supports "a stronger medium-term earnings growth outlook for Novozymes,”he said. Smith has a "buy" recommendation on Novozymes.
Bagsvaerd, Denmark-based Novozymes is the biggest producer of enzymes used in biofuel production and other industrial processes.
“DuPont’s decision to try to acquire Danisco is encouraging, in the sense that it shows major commitment to bioethanol,” Lars Topholm, an analyst at Carnegie Investment Bank A/S in Copenhagen said today by e-mail. “The immediate implications are neutral, though, and being two times larger than Danisco in enzymes, Novozymes’ position as the world’s largest industrial enzyme producer is undisputed.” Topholm has an "underperform" recommendation for Novozymes.
Henrik Simonsen, a senior analyst in Copenhagen at SEB Enskilda said that DuPont is not planning to raise Danisco’s development budget. "If Dupont does not significantly increase research and development, I struggle to see how they intend to boost enzyme sales,’’ he said in an e-mail today. Simonsen has a "buy" recommendation on Novozymes.
"DuPont has a stronghold in chemicals and fuels, and has chosen one approach to cellulosic ethanol, whereas Novozymes has a different approach," Simonsen said. "If I were to bet on a winning strategy, I would place my bet on Novozymes."
Novozymes rose about 4.5 percent, to close at 837 kroner ($145.71) in Copenhagen today. Shares of Danisco rose 0.08 percent to 657.50 kroner, after rising 24 percent yesterday. DuPont was down 0.3 percent to $48.90 at 3:35 p.m.
To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net.
To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.
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