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Wilmington, Del.-based Danisco said DuPont will pay $115 a share, which is 25% more than the Jan. 7 closing share price. DuPont will also assume $500 million of debt.
DuPont’s chief executive officer, Ellen Kullman, pounced on Danisco five months after it lifted a cap on shareholder voting rights, seeing a chance to expand in biofuels amid a paucity of takeover targets.
“It’s a good deal for DuPont, and with a 25% premium to the share price, it’s also a good deal for Danisco shareholders,” says Jens Houe Thomsen, an analyst at Jyske Bank in Silkeborg, Denmark. “Danisco has the world’s second-best biofuels business and a strong cooperation with DuPont already.”
The enzyme market is “very attractive” as makers of detergents, animal feed and food are also turning to bacteria and catalysts to improve yields and counter input costs, Houe Thomsen said.
Danisco selected DuPont from potential suitors as it provided the best fit and price, says Jorgen Tandrup, Danisco chairman.
Kullman is diversifying DuPont away from 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.
“We already know how to work together productively,” Kullman says. “They have been our trusted partners in biofuels and biomaterials.”
DuPont will realize $130 million in annual cost savings from the combination by 2013, according to chief financial officer Nicholas Fanandakis. DuPont’s debt may be downgraded one notch at most, he said.
Danisco, which once produced the liquor schnapps, will be the largest takeover by DuPont since it bought genetically-modified seed maker Pioneer Hi-Bred International Inc. for $7.7 billion in 1999.
The U.S. company will use $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 in 2012, DuPont said. The deal will reduce 2011 earnings by 30 to 45 cents a share. The company had forecast full-year earnings of $3.30 to $3.60 a share.