EI DuPont de Nemours & Co. (DD) extended its $6 billion takeover bid for Danisco till April 29 after holders of only 6% of the Danish company’s shares accepted the offer. The extension offers more time to get regulatory approvals from China and the European Union, the absence of which could restrain the uptake of the offer.
DuPont needs 90% of Danisco shares before it can oblige the remaining shareholders to give up their stakes. The deal is expected to close by the end of the second quarter of 2011.
DuPont is offering 665 Danish kroner ($125.67) for each share of Danisco, a 58.7% premium to the company’s average trading price within 12 months before the bid.
The deal will enable DuPont to extend the company’s offerings in more specialized areas like biofuels and food enzyme.
We believe the deal would enable Dupont to enter a niche in the chemical industry, food additives, long dominated by its rivals International Flavors & Fragrances Inc. (IFF). DuPont is focused on capturing $1 billion in working capital productivity gains during 2011−2013. The company is also on track to achieve a combined $600 million in benefits from fixed cost productivity and restructuring actions. It is executing strategies for further development and growth of new products, particularly for agriculture, photovoltaics, alternative energy and materials.
Furthermore, the company’s focus on the emerging markets, along with a strong performance in the Agriculture & Nutrition segment, is expected to generate top-line growth in future.
Currently, DuPont has a Zacks #3 Rank (Hold) for the short term and an Outperform recommendation for the long term.
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