DuPont Inc, the world's second largest chemical company by market value, today agreed to buy Danish food ingredients giant Danisco AS for $5.8 billion in cash, in a bid to emerge a global leader in the food and biofuels business.
Copenhagen, Denmark-based Danisco was formed through the country's largest ever industrial merger in 1989 between Danish Sugar, Danish Distillers and Dansk Handels- og Industri Company.
Danisco is one of the world's leading producers of ingredients for food and other consumer products and was also one of the biggest sugar producers in Europe until it hived off its sugar division to in 2009.
Danisco is a leading technology-driven company having specialty food ingredients, including enablers, cultures and sweeteners that generate about 65 per cent of total sales. It also has Genencor, its enzymes division that represents 35 per cent of total sales.
The Copenhagen Stock Exchange-listed company had reported net income of 481 million kroner on sales of 13.71 billion kroner last year.
Danisco and DuPont are already joint venture partners in the development of cellulosic ethanol technology. Danisco has nearly 7,000 employees globally with operations in 23 countries.
Delaware-based DuPont, with a market value of $45 billion and the world's second largest chemical company by market capitalisation behind BASF, is buying Danisco for t 665 kroner or $5.8 billion in cash and assume $500 million Danisco's debt, taking the deal value to $6.3 billion.
Danisco has two well-positioned global businesses that strongly complement DuPont's current biotechnology capabilities, R&D pipeline, and specialty food ingredients, a combination that will offer attractive long-term financial returns. This also would create new opportunities across other parts of the DuPont portfolio, including traditional materials science offerings, said Dupont in a statement.
''This transaction is a perfect strategic fit with our growth opportunities and will help us solve global challenges presented by dramatic population growth in the decades to come, specifically related to food and energy. In addition, biotechnology and specialty food ingredients have the potential to change the landscape of industries, such as substituting renewable materials for fossil fuel processes and addressing food needs in developing economies, that will generate more sustainable solutions and create growth for the company,'' said Ellen Kullman chairman and CEO of DuPont.
DuPont expects to finance the acquisition with about $3 billion in existing cash and the remainder in debt. The transaction is expected to close early in the second quarter.
With 2009 sales of $26 billion, the chemical giant has recently gone on an acquisition spree by acquiring MECS, Inc. a designer and constructor of sulfuric acid plants in November last year for a undisclosed sum. (See: DuPont to acquire sulfuric acid plant maker MECS Inc)
Although the South African regulator blocked its takeover of local seed firm Pannar Seed last month, DuPont acquired two US-based advanced plant genetics seed companies, Seed Consultants Inc, and Terral Seed.