Web Date: January 10, 2011
DuPont To Buy Danisco For $6.3 Billion
DuPont has signed a definitive agreement to buy the enzymes and food ingredients firm Danisco for $6.3 billion, including the assumption of $500 million in debt. The deal will enhance DuPont's industrial biotechnology efforts and take it into new businesses related to food and energy.
DuPont plans to finance the purchase with $3 billion of cash on hand and the rest in debt. Danisco shareholders will realize a 25% premium for their shares, based on their Jan. 7 closing price. The two firms expect to close the deal in April or May, pending shareholder and regulatory approvals.
The merger will bring together Copenhagen-based Danisco, with annual sales of $2.4 billion and 7,000 employees, and DuPont, a diversified U.S. chemicals and materials maker with more than $26 billion in sales. Through its Genencor subsidiary, Danisco is the world's second largest maker of industrial enzymes after Novozymes. It's also a leading producer of food stabilizers, cultures, and sweeteners.
Danisco will mark DuPont's first major acquisition since it acquired seed and plant genetics firm Pioneer Hi-Bred in 1999 for $7.7 billion. The deal is also CEO Ellen Kullman's first big transaction since she became CEO in 2009. Danisco, Kullman says, "is a perfect fit with our growth opportunities." She adds that Danisco "will help us solve global challenges presented by dramatic population growth in the decades to come, specifically related to food and energy."
Discussions with DuPont and other bidders for Danisco have been going on for several months, Danisco Chairman JØrgen Tandrup said during a press conference following announcement of the deal. Although Tandrup declined to identify the other bidders, he did say several firms continued to bid for Danisco up until the last moment. DuPont won the auction because it offered both "the best price and the best fit."
Danisco and DuPont are by no means strangers. The two have a joint venture, called DuPont Danisco Cellulosic Ethanol, which recently set up a biofuels demonstration facility in Vonore, Tenn. They also have a relationship through Genencor, which Danisco acquired in 2005. Going back a decade, the two have worked together developing fermentation organisms to convert sugars from starch and cellulose into ethanol and the textile fiber feedstock 1,3-propanediol.
Laurence Alexander, a stock analyst with investment banking firm Jefferies & Co., says Danisco's businesses will help DuPont "transform and revive its portfolio." Danisco is an especially significant acquisition, he says, because DuPont "has been the most vocal large company concerning the opportunities in industrial biotechnology."
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