DuPont Has Likely Defeated Rival Bidders for Danisco, RBS Says

DuPont Co., which beat competitors by agreeing to buy Danisco A/S for $5.8 billion yesterday, has probably sealed the deal because a higher offer is unlikely, Royal Bank of Scotland said.

The U.S. company’s 665 kroner-a-share cash offer, equal to 10.1 times estimated 2011 calendar year adjusted earnings before interest, tax, depreciation and amortization, is “undemanding,” yet DuPont’s financial muscle and the agreement with Danisco’s management would be barriers to any rival bid being proposed now, RBS analyst Iain Simpson wrote in a note.

DuPont Chief Executive Officer Ellen Kullman pounced on Danisco five months after it lifted a cap on shareholder voting rights, seeing a chance to expand in biofuels amid a paucity of takeover targets. Danisco Chairman Jorgen Tandrup said in an interview yesterday that there were a few bidders that “right to the final moment” were competing to make the best offer.

“We see it as possible but unlikely that a competing bid emerges at a higher price,” said Simpson. The deal size “makes Danisco too large for most other food-ingredients players and the emergence of a break-up bid from private equity unlikely,” he said.

The U.S. company won the backing of Danisco management with an offer that was 25 percent higher than the prior closing share price. The “definitive” agreement, expected to close in the second quarter, failed to prevent Danisco shares touching 670.5 kroner in Copenhagen trading yesterday, indicating some investors retained doubts over the finality of the offer.

Danisco, which produces sweeteners and cultures used in ice cream and cheese, traded unchanged at 657 kroner as of 10:23 a.m. in Copenhagen.

DuPont may opt to divest some food-ingredient units, which could prove attractive to Tate & Lyle Plc and Kerry Group Plc, Simpson said.

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