February 3, 2011 / 5:20 PM / in 7 years

Take DuPont's bid for Danisco, analysts recommend

 * Seven out of 10 analysts recommend DuPont’s offer 
 * Five out of 10 see potential for sweeter DuPont bid
 * Nine out of 10 expect no rival bid to emerge
 * Analysts split over whether DuPont will win 90 pct acceptance
 By Teis Jensen
 COPENHAGEN, Feb 3 (Reuters) - Shareholders in Denmark’s Danisco DCO.CO should accept U.S. chemicals giant DuPont’s DD.N $5.8 billion cash offer to acquire the company, a majority of analysts polled by Reuters said on Thursday.
 The poll revealed that seven out of 10 analysts advised Danisco stockholders to take the 665-crowns-per-share offer even though half saw potential for a higher bid from DuPont to clinch the deal.
 DuPont and Danisco announced the $6.3 billion deal, which includes assumption of $500 million in debt, on Jan. 9 and Danisco’s board has said it is the best possible deal for shareholders despite signs of brewing dissatisfaction.
 DuPont Chief Executive Ellen Kullman made a lightning visit to Denmark on Monday to tell shareholders not to expect any higher bid. [ID:nLDE7101AX]
 But five out of the 10 analysts in Reuters survey said they thought DuPont was likely to raise its offer to ensure it wins the 90 percent acceptance that it has made a condition for the transaction.
 Even so, some also rated the risk that DuPont would not raise its bid and the whole deal would fall apart as too high, so most of them recommended accepting the current offer.
 “If you look at the upside of an increased bid and compare that with the price the share can fall back to if the bid fails altogether, then you can figure out why I recommend selling at the current offered price,” Alm. Brand analyst Michael Jorgensen told Reuters.
 He would not rule out that DuPont could raise the offer to around 700 crowns but said the share price could drop to around 580 crowns if DuPont refuses to lift the offer and the deal is called off. 
 DuPont’s offer represents a 25 percent premium to Danisco’s earlier all-time high price of 530 crowns reached just before the deal was announced.  Those analysts who expected DuPont to raise its bid, saw it raising to between 695 and 740 crowns, an increase of between 5 and 11 percent.
 There was a consensus among the analysts that no other potential buyer would launch a competing bid for Danisco at this stage.
 Jyske Bank analyst Jens Thomsen said it was difficult to see anyone else who could justify a higher bid.
 “If there are no other bidders to push the price up, I don’t see why DuPont would raise its offer,” Thomsen said.
 Various Danisco shareholders, from small private owners to a few institutional investors, have expressed discontent with the price and in Danish media they have threatened to block the deal.
 Handelsbanken analyst Dan Jensen told Reuters on Wednesday that he would recommend Danisco’s shareholders to wait and see how the battle turns out as the current bid runs until Feb. 22.
 Many observers have been waiting for the single largest shareholder, Danish pension fund group ATP with a 5.1 percent stake in Danisco, to announce its stance. Asset manager BlackRock (BLK.N) and Dutch chemicals group DSM (DSMN.AS) are among the other major shareholders.
 (Following are analysts’ responses)
                                          Yes        No     Don’t know
  Should Danisco shareholders sell to DuPont at the offered 665-crown price?      7         2          1
  Will DuPont reach the required  90 percent acceptance from Danisco  shareholders at the current bid level?         4         6          0
  Will DuPont raise its bid for Danisco?         5         5          0
  Will anyone else launch a competing bid?       0         9          1
 Analysts from ABG Sundal Collier, Carnegie, Alm. Brand Markets, Cheuvreux, Credit Suisse, Dansk Aktie Analyse, Handelsbanken Capital Markets, Jyske Markets, Nykredit Markets and Sydbank participated in the poll.  (Additional reporting by Shida Chayesteh; editing by Elaine Hardcastle)  

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