DuPont Co., the third-biggest U.S. chemical maker, increased its offer for Danisco A/S by 5.3 percent to 33.4 billion kroner ($6.63 billion) after failing to win enough investor support for its initial takeover bid.
Danisco shareholders would receive 700 kroner a share, up from a Jan. 9 proposal of 665 kroner, Wilmington, Delaware-based DuPont said Saturday in a statement. The bid, which is 32 percent more than Danisco’s closing price before the initial offer, expires May 13. DuPont lowered the minimum number of shares it’s seeking in the tender offer to 80 percent from 90 percent.
DuPont Chief Executive Officer Ellen Kullman agreed to buy Danisco to gain production of food additives and enzymes used in biofuels. Elliott Associates LP, a New York-based hedge fund, and Copenhagen-based retirement fund AP Pension were among investors that spurned the first bid as too low. DuPont estimated 48 percent of shares have been tendered so far.
“These terms represent our best and final offer,” Kullman said in the statement.
Elliott, which raised its stake in Danisco to 5.05 percent of shares from 1 percent in February, had said the initial bid undervalues the company. Elliott’s holdings rival that of Danisco’s largest shareholder, pension fund ATP, which has a 5.1 percent stake, according to data compiled by Bloomberg. ATP endorsed the higher bid Saturday.
Scott Tagliarino, a spokesman for Elliott, declined to comment on the raised offer when contacted by e-mail.
“I ask that all Danisco shareholders join with ATP in supporting this compelling opportunity by tendering their shares in the offer,” Claus Wiinblad, ATP’s head of Danish equities, said in DuPont’s statement.
Danisco rose 13.5 kroner, or 2.1 percent, to 668 kroner yesterday in Copenhagen trading. That was the eighth session in April the shares closed above DuPont’s offer price, indicating some shareholders expected a higher bid.
A 5 percent increase has a minimal impact on the deal, Mark Gulley, a New York-based analyst at Soleil Securities who rates DuPont shares a “buy,” said in a telephone interview. “Having decided that this is a strategic acquisition, they have to be a little flexible on the price,” he said.
Investors who already tendered their shares will receive the increased offer price, DuPont said.
“Unless 80 percent of Danisco shares are tendered by the May 13 deadline, we will end our offer,” Kullman said in the statement.
Kullman, 55, 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, and it is second behind Denmark’s Novozymes A/S in industrial enzymes. Danisco and DuPont already share a venture that makes ethanol from corn cobs and switchgrass.
DuPont is proposing to pay 21 times Danisco’s estimated earnings per share in the year through April 2012, according to the average profit estimates of analysts surveyed by Bloomberg. Competitor Kerry Group Plc, based in Tralee, Ireland, trades at 13 times estimated earnings this year; Associated British Foods Plc, based in London, trades at about 14 times earnings through September; and Novozymes trades at 30 times estimated 2011 earnings.
DuPont said Jan. 10 it planned to use $3 billion of cash and will finance the rest of the deal with debt. The company said it will assume net debt of about $500 million. The transaction will add to earnings starting next year, DuPont has said.
DuPont extended its initial bid in February and March while awaiting antitrust clearance from the U.S., European Union and China.
The deal would be DuPont’s largest takeover since the 1999 acquisition of genetically modified seed-maker Pioneer Hi-Bred International Inc. for $7.7 billion.
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