The Danish biotech company has been considered a prime acquisition target since its sugar division was carved off and sold to Nordzucker in 2009. Rumours about potential buyers had focused on private equity.
The offer from DuPont is for $5.8bn (€4.5bn or DKK 33.5bn at today’s exchange rates) plus assumption of $500m (€386.7m; DKK 2887.6m) in debt, through the purchase of all shares of a nominal value of DKK20 each at a cash price of DKK 665.
Danisco’s board is recommending that shareholders accept the offer. It represents a 25 per cent premium on Friday’s closing share price – which was an all time high – and a 90 per cent premium on the share price 12 months ago. The total acquisition price is 12.8 times the company’s EBITDA, based on the last 12 months.
Jørgen Tandrup, chairman of the board of directors, said in a statement: “We believe this offer represents attractive value for Danisco shareholders at a time when the share price is at an all-time high, and that it is in the best interest of the business and our employees.
“There will be substantial opportunities as part of a larger group and DuPont will bring significant advantages to Danisco’s strategy and further development. DuPont and Danisco make a powerful combination and will benefit from each others’ complementary strengths and skills.”
Tandrup revealed at an analyst presentation today that some other companies were bidding for Danisco right up until last night, but DuPont not only offered the best price but has also deemed the best fit.
Danisco today reiterated its guidance for full year 2010-11 provided on 16 December 2010, in which it said it expected group revenue of around DKK 15.3 bn – up from a previous expectation of DKK 15bn. Cultures and enzymes (Genencor) are expected to see growth of 7 to 9 per cent, and enablers and sweeteners of 3 to 5 per cent.
Existing relationship
Danisco and DuPont already have a history of working together, as they are already partnering over the development of second generation biofuels.
DuPont Chair and CEO Ellen Kullman said: “Danisco has attractive, market-driven science businesses that offer clear synergies with DuPont Nutrition & Health and Applied BioSciences.
“This transaction is a perfect strategic fit with our growth opportunities and will help us solve global challenges presented by dramatic population growth in the decades to come, specifically related to food and energy.”
The acquisition, which is expected to close in Q2 2011, is expected to take a toll on earnings per share; outlook for 2011 would reduce by between $0.30 and $0.45 per share, from the previously stated $3.30 to $3.60. DuPont has said it expects Danisco to be accreditive to cash and earnings in 2012, the first full year of combined operations.
Danisco CEO Tom Knutzen said at the analyst meeting that DuPont has signalled research business activities will remain in Denmark, but it is too early to say whether any employees will be laid off as a result of the acquisition. No competition hurdles are anticipated to the closure of the deal, as the two companies currently have complementary, not competitive, business activities, he said.
Kullman has been at the helm of DuPont for two years and Danisco will be her first major acquisition. It was under her predecessor Charles Holliday that DuPont acquired Pioneer $7.7bn. Although some analysts were critical of Holliday for paying such a high price, the Pioneer buy-out propelled the chemical firm into the food and nutrition arena.