DuPont Wins Support of Danisco Investors to Complete Buyout
DuPont Co., the third-biggest U.S. chemical maker, won control of Danisco A/S after getting 92.2 percent of the Danish food-ingredient maker’s shares in its 33.4 billion-krone ($6.36 billion) tender offer.
All conditions for completing the offer of 700 kroner a share have been fulfilled, Wilmington, Delaware-based DuPont said today in a statement. DuPont will delist the Copenhagen- based company’s shares next month and incorporate its financial results effective with the current quarter, Michael Hanretta, a DuPont spokesman, said by telephone.
The transaction is DuPont Chief Executive Officer Ellen Kullman’s first major acquisition since she started in the job two years ago, giving her the world’s biggest maker of food additives and the second-biggest industrial-enzymes producer.
Kullman, 55, raised the friendly bid by 5.3 percent on April 29 after failing to win enough support for the initial offer of 665 kroner a share. The revised proposal won backing from Danish institutional investors including pension fund ATP.
“It’s another feather in Ellen’s cap,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisers who rates the shares “neutral,” said today in a telephone interview. “She showed some discipline and didn’t bow down.”
Kullman, who has exceeded analysts’ profit estimates in each of nine quarters since becoming CEO, is expanding beyond such DuPont mainstays as Kevlar bullet-resistant fabric and titanium-dioxide pigment used in paint. Danisco’s ingredients business makes sweeteners and cultures for ice cream and cheese, while its enzymes unit, the second-biggest producer after Denmark’s Novozymes A/S, supplies the biofuels industry.
Danisco and DuPont already share a venture that makes ethanol from corn cobs and switchgrass. DuPont’s agriculture and nutrition unit is the second-biggest seed company behind Monsanto Co. (MON) and Danisco will bolster the part of the division making soy protein and other food ingredients.
“This looks like a smart way to reposition a segment that needed to be repositioned,” Mark Connelly, a New York-based analyst at Credit Agricole SA who has an “overweight” rating on DuPont, said in a May 13 telephone interview. “It dramatically distinguishes them in the agriculture segment from Monsanto.”
Danisco rose 1 percent to 700 kroner at the close of Copenhagen trading. DuPont gained 1 cent to $52.92 at 4 p.m. in New York Stock Exchange composite trading.
DuPont is buying Danisco for 32 percent more than its closing share price on Jan. 7, the last trading day before the deal was announced.
DuPont is paying 21 times Danisco’s estimated earnings per share in the year through April 2012, according to the average profit projections of analysts surveyed by Bloomberg. Irish food company Kerry Group Plc trades at 13 times estimated earnings this year; London-based Associated British Foods Plc (ABF) trades at 15 times earnings through September; and Novozymes trades at 31 times estimated 2011 earnings.
The deal is DuPont’s largest takeover since the 1999 acquisition of genetically modified seed-maker Pioneer Hi-Bred International Inc. for $7.7 billion.
While DuPont needed only 80 percent of Danisco shares to close the transaction, it needed 90 percent to terminate the Copenhagen-based company’s stock listing and force holdouts to sell their stock.
Elliott Associates LP, a New York-based hedge fund, argued that the initial bid was too low in a Feb. 11 letter to Danisco’s board. Elliott doubled its Danisco stake to 10 percent, Danisco said on May 6. Scott Tagliarino, an Elliott spokesman, declined to comment today.
DuPont said Jan. 10 it planned to finance the transaction with debt and $3 billion of cash. The company said at the time it would assume Danisco’s net debt of about $500 million. The takeover will add to earnings starting next year, DuPont said.
Dow Chemical Co. (DOW) and Exxon Mobil Corp. are the two largest U.S. chemical makers by sales.
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