March 16, 2011

Danisco's Q3 results may induce DuPont to revise offer

Analysts expect Danisco to post strong third-quarter results, and as such, some hold the view that DuPont may revise its US$5.9 billion offer for the Danish company.

Last month, DuPont extended its DKK665 (US$124) per share offer until April 1 after only 5% of Danisco shareholders had accepted. Some shareholders have said they want a higher price, based on what they see as Danisco's good earnings potential.

Analysts expect on average a 38% increase in earnings before interest and tax (EBIT) for the three months to end-January, to DKK468 million (US$87.49 million).

"A strong result for the third quarter would strengthen the Danisco shareholders' argument that Danisco is worth more to DuPont than what they have offered," Handelsbanken analyst Dan Togo Jensen said.

He saw a fair chance that DuPont would raise its bid by DKK30-50 (US$5.60-9.35) per share, although the US company has repeatedly said it will not raise the offer, which was endorsed by Danisco's board.

Financial analysis firm Aktieinfo's chief analyst Lau Svenssen said a good third quarter could give DuPont an excuse to revise the bid.

"It seems as if they have reached a deadlock and then you need something to break the ice and talk again," Svenssen said.

However, Jyske Bank's analyst Jens Houe Thomsen said he did not think Dupont would come up with a higher bid as no competing offers have emerged.