DuPont Co agreed to acquire Denmark’s Danisco for US$5.8 billion in its biggest acquisition in more than a decade, adding production of enzymes used in food and biofuels.
DuPont will pay 665 kroner (US$115) a share, the Delaware-based company said on Sunday in a statement. That is 25 percent higher than Danisco’s 530 kroner closing share price on Jan. 7. DuPont will also assume US$500 million of debt.
Chief executive Ellen Kullman is diversifying away from DuPont stalwarts such as Kevlar bullet-resistant fabric and titanium dioxide pigment used in paint.
Danisco is the world’s largest food-ingredients maker, producing sweeteners and cultures used in ice cream and cheese. Both companies already share an -ethanol-producing venture.
“It’s a good deal for DuPont, and with a 25 percent premium to the share price, it’s also a good deal for Danisco shareholders,” said Jens Houe Thomsen, an analyst at Jyske Bank. “Danisco has the world’s second-best biofuels business and a strong cooperation with DuPont already.”
DuPont will use US$3 billion of cash and use debt to finance the rest of the deal. The acquisition should close early in the second quarter and add to earnings starting next year, DuPont said. The deal will reduce earnings this year by US$0.30 to US$0.45 a share. The company had forecast full-year earnings of US$3.30 to US$3.60 a share.
Danisco will be the largest takeover by DuPont since it bought genetically modified seed-maker Pioneer Hi-Bred International Inc for US$7.7 billion in 1999.
There have been US$84.8 billion in chemical company takeovers announced over the past year, with an average premium of 26 percent, according to data compiled by Bloomberg.
The US company is paying 15.2 times Danisco’s earnings before interest and tax, compared with the 15.3 average of 10 food industry deals since 2001.
“Enzymes are a very attractive market at the moment,” Houe Thomsen said. “With higher raw-material prices, companies in the detergents, animal feed and food business are turning to enzymes to increase their yield. DuPont has its eyes upon the second generation biofuels market.”
Danisco’s shareholders in August approved the board’s proposal to remove a restriction that limited the number of votes a single shareholder could have to no more than the equivalent of 7.5 percent of share capital, regardless of the holder’s stake.
“Without the removal of the voting rights cap, DuPont wouldn’t have made this offer,” Houe Thomsen said.
The company, led by chief executive Tom Knutzen, has given investors a total return of 53 percent over the past 12 months, the second-biggest gain on the Bloomberg Europe Food Index.
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