WILMINGTON, Del. (AP) — Chemical giant DuPont said Friday it has begun its offer to buy Danish food additives maker Danisco A/S for $5.8 billion, saying Danisco's board has recommended that shareholders accept it.
The offer, announced Jan. 10, is an effort by DuPont to beef up the products it offers to improve the taste and health benefits of food. It also gives the Wilmington, Del., company more exposure to alternative fuel markets, like ethanol, where Danisco products are also used.
The acquisition is being made through a public tender offer by a DuPont subsidiary at 665 Danish kroner ($115.25) per Danisco share.
DuPont said in the statement that the offer is a 58.7 percent premium over the average price of Danisco's shares in the year before the announcement, and a 32.5 percent premium compared with the average price during the month before the announcement.
According to DuPont, Danisco's board picked the DuPont offer after a bidding process.
The offer ends at 5 p.m. EST on Feb. 22. Holders of more than 90 percent of Danisco's shares must accept it for the deal to go through.
DuPont expects the offer to be finished early in its second quarter, depending on regulatory approvals.
DuPont said that Danisco is key to its dominance in the race to produce more and better food. It said Danisco has a strong presence in developing nations where population is expected to grow the most in coming years.
E.I. DuPont de Nemours & Co., founded in 1802, has been diversifying its business in recent years. Around 30 percent, or $9 billion, of 2010 sales were projected to come from products introduced in the last four years.
DuPont has been helped by growing demand for its agricultural products and the improving global economy, particularly in Asia. DuPont also makes chemicals used in electronics, autos and other industries.
The acquisition of Danisco, which has about 7,000 employees, includes the assumption of $500 million in debt.
It's expected to lower DuPont's 2011 earnings by 30 to 45 cents per share, but it should boost earnings within a year after closing, DuPont said. The company currently projects earnings of $3.30 to $3.60 for the year.
Shares of DuPont rose 47 cents to $48.59 in morning trading Friday.
