In their largest acquisition in over a decade, DuPont Co. has agreed to purchase Danish enzyme production company, Danisco, for $6.3 billion (500 million of which being Danisco’s net debt). The deal is part of DuPont’s efforts to move away from fossil fuels toward renewable resources — in particular, cellulosic ethanol.
DuPont and Danisco have had a working relationship as partners in DuPont’s cellulosic ethanol endeavors, utilizing Danisco’s enzyme biotechnology to breakdown cellulose to create ethanol from waste matter such as corncobs. In fact, DuPont and Dansico opened one of the world’s first cellulosic ethanol production facilities in Vanore, Tennessee in early 2010, with production expected to begin in 2011.
Danisco’s enzyme division, however, only accounts for 35% of the company’s overall sales, the other 65% comprising specialty food ingredients such as enablers, cultures and sweeteners, which DuPont will also acquire.
“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 DuPont Chair and CEO Ellen Kullman.
The acquisition is expected to be financed with about $3 billion in existing cash and the remainder in debt. The transaction is expected to close early in the second quarter and be cash and earnings accretive in 2012, the first full year of the combined entity. DuPont has set its 2011 earnings per share outlook at a range of $3.30 to $3.60 per share. The anticipated impact of this transaction would reduce that outlook by $.30 to $.45 per share on a reported basis.
Source: DuPont Co.
DuPont and Danisco have had a working relationship as partners in DuPont’s cellulosic ethanol endeavors, utilizing Danisco’s enzyme biotechnology to breakdown cellulose to create ethanol from waste matter such as corncobs. In fact, DuPont and Dansico opened one of the world’s first cellulosic ethanol production facilities in Vanore, Tennessee in early 2010, with production expected to begin in 2011.
Danisco’s enzyme division, however, only accounts for 35% of the company’s overall sales, the other 65% comprising specialty food ingredients such as enablers, cultures and sweeteners, which DuPont will also acquire.
“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 DuPont Chair and CEO Ellen Kullman.
The acquisition is expected to be financed with about $3 billion in existing cash and the remainder in debt. The transaction is expected to close early in the second quarter and be cash and earnings accretive in 2012, the first full year of the combined entity. DuPont has set its 2011 earnings per share outlook at a range of $3.30 to $3.60 per share. The anticipated impact of this transaction would reduce that outlook by $.30 to $.45 per share on a reported basis.
Source: DuPont Co.
