Danisco’s shareholders revolt against DuPont’s $5.8-bn bid
11 Feb 2011
Elliott Associates, the New York-based hedge fund with $17 billion under management, has become the latest shareholder demanding that chemicals giant DuPont raise its $5.8 billion bid for Danish food ingredients giant Danisco.
Elliott, holding 1.2 per cent stake in Danisco, has urged the board to reject DuPont's undervalued 665-crowns-a-share offer and said that the proposed sale was a "shameful betrayal" of shareholders.
It its letter to Danisco's board, Elliott cited the recent survey carried out by the Danish Shareholders' Association, which indicated that thousands of small investors are on the verge of rejecting the offer and Elliott threatened to join the increasing rebel group of shareholders in rejecting the offer.
SEB Asset Management of Sweden, which owns about 2 per cent of Danisco, has also voiced its opposition to the deal, while ATP, the Danish pension group and Danisco's biggest shareholder with a 5.1 per cent stake has yet to voice its opinion to the deal.
Much could depend on whether the offer is accepted by ATP, the Danish pension group and Danisco's biggest shareholder with a 5.1 per cent stake. It has yet to announce its intentions.
DuPont, the world's second largest chemical company by market value, had in January offered to buy Danisco for 665 kroner or $5.8 billion in cash and assume $500 million Danisco's debt, taking the deal value to $6.3 billion. (See: DuPont to acquire Danish food ingredients giant Danisco AS for $5.8 billion)
According to Elliott, Copenhagen, Denmark-based Danisco was worth between 675 to 702 crowns based on the nil premium of DuPont's offer despite Danisco having a strong market position and the synergies DuPont will gain through the merger.
Morgan Stanley has said that DuPont could raise its offer by 14 per cent, to 760 crowns a share based on the potential returns from Danisco's development of enzymes for the bioethanol industry.
