The world's second-largest seed maker, EI Du Pont De Nemours & Co. (DD), entered into a definitive agreement to acquire Denmark's Danisco for $5.8 billion in cash and assumption of $500 million of Danisco's net debt. The two companies are already partners in a joint venture focused on cellulosic ethanol.
The deal will enable DuPont to expand the company's offerings in more specialized areas like biofuels and food enzyme
Under the terms of the agreement, DuPont will pay 665 kroner ($115) per share. The transaction is expected to close early in the second quarter and be cash and earnings accretive in 2012.
The deal is DuPont's largest acquisition since its $7.7 billion Pioneer Hi-Bred International acquisition in 1999.
Danisco derives 65% of its sales from its specialty food ingredients business and the rest from its Genencor unit, which makes enzymes for food and industrial uses. It has nearly 7,000 employees in 23 countries. In December, the company estimated it would earn about 15.3 billion krone in revenue for its 2010-2011 fiscal year.
DuPont expects the takeover to reduce its earnings-per-share outlook by about 30 cents to 45 cents per share.
DuPont had earlier set its 2011 earnings-per-share outlook at a range of $3.30 to $3.60 per share, which is now expected to reduce its outlook by $0.30 to $0.45 per share on a reported basis.
We believe the deal would enable Dupont to enter a niche in the chemical industry -- food additives -- long dominated by 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 the future.
Currently, DuPont has a Zacks #3 Rank (Hold) for the short term and an Outperform recommendation for the long term.
DU PONT (EI) DE (DD): Free Stock Analysis Report
INTL F & F (IFF): Free Stock Analysis Report
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
