Create a free Manufacturing.net account to continue

DuPont To Purchase Danisco For $5.8B

WILMINGTON, Del. (AP) — DuPont is buying Danish food ingredients maker Danisco A/S for $5.8 billion as it looks to broaden its food and biofuels operations. The acquisition also includes the assumption of $500 million in debt. Danisco, which is already a joint venture partner with DuPont in the development of cellulosic ethanol technology, said Monday that it will recommend shareholders accept the deal.

WILMINGTON, Del. (AP) — DuPont is buying Danish food ingredients maker Danisco A/S for $5.8 billion as it looks to broaden its food and biofuels operations.

The acquisition also includes the assumption of $500 million in debt.

Danisco, which is already a joint venture partner with DuPont in the development of cellulosic ethanol technology, said Monday that it will recommend shareholders accept the deal. Its stock jumped 25 percent in Copenhagen trading to 662 kroner ($114.71).

E.I. DuPont de Nemours & Co., founded in 1802, has long been known for its chemicals business. But the Wilmington, Del., company has been trying to expand its operations. In December, CEO Ellen Kullman said 30 percent of the company's 2010 sales — about $9 billion — would come from products introduced in the past four years.

DuPont has been helped by growth in demand for its products used in agriculture, and by the improving global economy, particularly in Asia. DuPont makes chemicals used in farming, electronics, autos and other industries.

Kullman said in a statement late Sunday that Danisco is complementary to DuPont's biosciences business.

Danisco, based in Copenhagen, Denmark, makes enzyme and specialty food ingredients. Its ingredients are used in a wide range of industries from bakery, dairy and beverages to animal feed, laundry detergents and bioethanol. The company has nearly 7,000 employees.

Danisco Chairman Joergen Tandrup said Monday that there were several bidders for the company, with DuPont coming out ahead late last night. He doesn't expect any problems in getting the deal approved by the Danish Financial Supervisory Authority.

Tandrup believes DuPont is interested in all of Danisco's operations, but analyst Morten Imsgaard of Denmark's Sydbank is not so sure.

"As I see it DuPont has been going straight after the enzyme business at Danisco, and they have gotten the ingredients in as extra. We will see whether DuPont will consider whether they are the right owners of the ingredients business," he said.

The acquisition will be made through a public tender offer by a DuPont subsidiary at 665 kroner ($115.25) per Danisco share.

The transaction is expected to lower DuPont's 2011 earnings by 30 cents to 45 cents per share. DuPont currently anticipates earnings of $3.30 to $3.60 for the year.

The acquisition is expected to close early in the second quarter and add to DuPont's 2012 earnings. It will pay for the acquisition with about $3 billion in cash and the rest in debt.

In pre-market trading Monday, DuPont shares were down 11 cents to $49.65.