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Danisco Urges Shareholders to Accept $6.64B DuPont Bid

Copenhagen-based food firm Danisco is urging its shareholders to accept a newly raised $6.64 billion takeover big from DuPont, Reuters reported. The cash offer was raised by 5% late Friday. Danisco’s biggest shareholder, Danish pension insurance group ATP — which owns 5.1% of the stock — said it would accept DuPont’s new offer, Reuters reported. Other shareholders include SEB Asset Management, which owns about 2% of Danisco’s stock.

(Reuters) – Danish food ingredients firm Danisco urged shareholders on Monday to accept DuPont’s raised $6.64 billion bid, as fund managers welcomed the “decent offer” and said it was likely to succeed.

DuPont raised its cash offer late on Friday by 5 percent to 700 Danish crowns ($139) per share from 665 crowns, in an eleventh hour attempt to win over several key shareholders who snubbed the original deal recommended by their board in January.

Danisco’s shares were up 4.3 percent at 696.50 crowns by 1214 GMT, after earlier rising to an all-time high of 698.

The board said on Monday the new offer was at a 32.1 percent premium to Danisco’s share price on the last trading day before the deal was announced in January and a 67.1 percent premium to the previous year’s average price.

DuPont, which up until Friday had repeatedly said it would not raise the bid, also lowered the acceptance level that it requires of Danisco shareholders to 80 percent from 90 percent and extended the offer period to May 13.

The U.S. company said on Friday that shareholders with 48 percent of Danisco’s stock had already backed the deal.

Danisco’s biggest shareholder, Danish pension insurance group ATP with 5.1 percent of the stock, said it would accept DuPont’s new offer, and some other institutional investors also said they would now take the money.

“We think this is an attractive offer and we are willing to support this new increased bid,” Claus Wiinblad, ATP’s head of Danish equity investments, told Reuters.

“I think that this increased bid will lead most people to accept the offer,” Wiinblad said. “The likelihood of it going through is quite good.”

SQUEEZE-OUT UNCERTAIN

Under Danish law a 90 percent acceptance ratio is needed for a buyer to squeeze out minority owners and delist the acquired company.

When private equity investors took control of Danish telecom group TDC in 2005 they failed to get 90 percent of the stock, leaving TDC listed with a very low market liquidity until the majority owners sold 30 percent of the stock last year.

If DuPont does not get 90 percent, it can try to pick up shares remaining on the market from any remaining small investors, Sydbank analyst Morten Imsgard said. But he added that bigger minority stakes could be a problem.

“Bigger professional investors would be in for the long term and DuPont would have very little opportunity to get hold of those shares,” said Imsgard.

Imsgard said it would not be attractive to remain a small minority shareholder, and cut his recommendation on the stock to “underweight” from “neutral”.

RESISTANCE BROKEN?

SEB Asset Management, which has about 2 percent of Danisco’s stock under management and had rejected the initial bid of 665 crowns, said it would accept the new offer.

“We are going to sell our shares to DuPont at the current bid,” SEB Asset Management’s head of Danish equity investments Niels Andersen told Reuters.

“The bid is not fantastic but it is a fair price,” Andersen said. “We think DuPont will succeed in getting the 80 percent at the 700-crown level.

LD Invest, which manages 6 billion Danish crowns ($1.19 billion) worth of stock for 12 Danish institutional investors who had been reluctant to take the earlier offer, said investors should accept the new offer.

“We think it is a decent offer, and I think they will get through with the 80 percent (acceptance) at least,” LD Invest’s chief portfolio manager Keld Henriksen told Reuters.

“I don’t see any reason why people should not accept this offer,” Henriksen said.

($1=5.036 Danish crowns)

(By John Acher; Additional reporting by Jakob Vesterager, Shida Chayesteh and Mette Fraende; Editing by Sophie Walker, Greg Mahlich)