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Danisco improves enzyme position on Genencor deal

28-Jan-2005

Danisco is set to become the world's number two enzyme player, as the Danish ingredients firm signs a deal to acquire US biotech firm Genencor.

In a move that surprised observers, Danisco announced this week it will pay €419 million to Eastman Chemical for its 42 per cent stake in the NASDAQ listed firm.

 

Danisco already has a 42 per cent slice of the firm. Acquiring Eastman's share, Danisco will now make a tender offer to the minority shareholders for the rest.

 

Industry observers had predicted in the past that the Danish firm might shuffle off its Genencor stake, to fuel growth and acquisitions, in the food ingredients sector.

 

According to the Danish firm, clear attractions of the deal include Genencor's extensive R&D enzyme platform with applications mainly in the food, beverage and, new to Danisco, healthcare industries.

 

Investment bank Goldman Sachs cautions that the offer may "now prevent Danisco from making further scale acquisitions in the broader ingredients arena in our view."

 

But for the Danish firm, with a market capitalisation of €2.23 billion, the deal hinges on the technology that Genencor will bring into the fold. Danisco believes the US firm's know-how in food enzymes will bring important benefits to its food ingredients business.

 

" Through this new business area, Danisco will be able to service the same customers in more ways, in particular large multinationals with household personal care and food product portfolios," the firm said in a statement this week.

 

Enzymes in food are currently staring at relatively flat growth, of about 2 to 3 per cent. But while the volumes of pure enzyme protein produced are very small, their value reached over $2 billion (€1.53bn) in 2004, according to BCC market analysts.

 

"There is no reason to assume that enzyme use will decrease in the future and considering the development of the various application sectors, the enzyme market in 2009 is estimated to be in the range of $2.4 billion,"they predict.

 

Danish firm Novozymes dominates the enzyme market with about a 50 to 60 per cent share. With 30 per cent, US biotech firm Genencor, falls into second place, a position that Danisco will now take over.

 

Shares in Danisco on the Copenhagen stock exchange dropped to DKK325 from over DKK341, on hearing the news about the deal yesterday, but at 11.00CET on 28 January 2005 they had climbed to DKK337, up 2.59 per cent.

 

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