CSM could be target for bio firms that missed out on Danisco, analysts

13-Jan-2011 - Last updated on 13-Jan-2011 at 13:03 GMT

More deals in the mould of Danisco-DuPont could be feasible, as analysts predict other ingredient firms with small bio-business, such as CSM, will generate acquisition interest.

DuPont began this week by revealing its plan to buy Danish ingredients biotech firm Danisco for US$6.2bn. While DuPont is certainly not turning its nose up at a thriving food ingredients business, its interest was driven mainly by Genencor, with which it has been long-term partner over second-generation biofuels.

In a conference call on Monday Danisco CEO Tom Knutsen said there had been some other players in the running, but that DuPont was deemed the best fit – and made the best offer.

Knutsen kept his counsel on the identity of the other bidders but, according to Danish newspaper Borsen, Belgian industrial chemicals group Solvay was also in the running. Meanwhile DSM, which owns a 4.95 per cent stake in Danisco, has said it will not challenge DuPont’s proposal but has not said whether or not it was involved in bidding last weekend. Since DSM announced its bid to acquire Martek for over $1bn in December ratings agencies have sized its war chest for further, even larger, acquisitions.

David Kerstens, an analyst at UBS, reckons there are other tempting opportunities out there for others looking to go shopping – and prepared to pay in the billions for a company of Danisco’s profile and calibre. He identified CSM as a particularly interesting proposition.

As with Genencor for Danisco, lactic acid, which finds uses in bio-materials, is only a small part of the CSM business. Purac accounted for 13.9 per cent of sales in 2009, but that included food preservation uses as well as green chemistry and bio-plastics. Bakery ingredients made up the lion’s share.

A spokesperson for CSM did not return a call from FoodNavigator.com for a reaction on the speculation.

No sense in Chr Hansen

Chr Hansen, a compatriot of Danisco and leader in the cultures market, is not widely regarded as an acquisition target in the light of its recent IPO.

Since it floated on the Danish stock market in June 2010 share prices have risen by 30 per cent. “If anyone had wanted to buy Chr Hansen they should probably have acted nine months ago,” CEO Lars Frederiksen told FoodNavigator.

He acknowledged that “as a public company we are basically for sale every say,” but added that he would be surprised to receive a bid at this stage.