Isra-Mart srl:DuPont backs biofuels with $5.8bn Danisco deal

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Chemicals giant DuPont has moved to beef up its presence in the fast-expanding biofuels market with the announcement it is to acquire Danish food and biotechnology company Danisco in a $5.8bn deal.

Under the terms of the deal, which was announced yesterday, DuPont will also assume $500m of Danisco's net debt. DuPont chair and chief executive Ellen Kullman said the acquisition would establish the company as a leader in industrial biotechnology.

"Danisco is a premier company, a long-time successful partner of DuPont and a proven innovator committed to sustainable growth," she said. "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."

Analysts signalled that Danisco's expertise as a developer of enzymes and chemicals for the biofuels industry had been one of the main drivers behind the deal, noting that DuPont is already in partnership with Genencor, a Danisco subsidiary that produces biofuels from grasses and waste plant matter.

Alongside Genencor, which accounts for 35 per cent of Danisco's total sales, the company has a specialty food ingredients business, which Morten Imsgaard, an analyst at Danish bank Sydbank, told Associated Press may not be of much interest to Dupont.

"As I see it DuPont has been going straight after the enzyme business at Danisco, and they have gotten the ingredients in as extra," he said. "We will see whether DuPont will consider whether they are the right owners of the ingredients business."

Kullman rejected suggestions DuPont may look to break up the firm, insisting the whole Danisco business would strengthen the DuPont brand.

"Danisco has two well-positioned global businesses that strongly complement our current biotechnology capabilities, R&D pipeline, and specialty food ingredients, a combination that offers attractive long-term financial returns," she said. "This also would create new opportunities across other parts of the DuPont portfolio, including traditional materials science offerings."

The deal, which is expected to close in the second quarter subject to regulatory approval, further underlines investor interest in the emerging biofuels sector.

It also comes just days after the EU granted regulatory approval of Shell's proposed takeover of Brazilian biofuels giant Cosan, removing one of the main obstacles for the proposed $12bn deal.