DuPont’s plan to acquire Danisco for US$6.3bn was announced yesterday, and although the two companies have a long history of working together on biofuels and biomaterials, senior executives are equally keen to explore synergies and opportunities in food ingredients.
In a conference call with investors CEO Ellen Kullman credited Danisco’s food ingredients business with showing “a strong performance”.
“When combined with our nutrition and health business DuPont would be positioned as a premier specialty food ingredients provider,” she said.
DuPont’s nutrition portfolio includes Solae, a joint venture with Bunge that specialises in soy proteins. In 2010 it also launched an dietary supplement range in the US that uses a high-dose, yeast-derived EPA omega-3 ingredient. Called New Harvest, softgels deliver 600mg of EPA (eicosapentaenoic acid) per 1200mg capsule and are co-branded with Futurebiotics.
Asked what synergies may exist between Danisco and Solae, Kullman said: “There is some ability to utilise some of the different channels on both sides to enable higher growth, so I think that’s going to be very, very complementary.
“Solae’s proteins are highly relevant in meat, Danisco’s are highly relevant in dairy, and I think the cross fertilisation there will create some meaningful growth.”
She would not be drawn on any plans DuPont might have to buy up other food ingredient acquisitions to fill out its portfolio, saying: “Well I’d like to digest this one first, but I think this is an area where we see application development in science really pays.
“We have seen that with our Solae business and with our work in omega-3s, so I think it’s a good growth market segment; specialty food ingredients grows 6 to 8 per cent per year, and the nutrition side is getting a lot of play.”
She was similarly non-committal about whether she would entertain cleaving off any parts of Danisco, as often happens following a major acquisition.
Research streamlining and synergies
Thomas Connelly, executive vice president and chief innovation officer, did raise the possibility of removing some of the R&D infrastructure where there is duplication, but in general the approach is on nurturing the R&D culture.
Danisco typically spends a higher percentage of sales (6 per cent) than DuPont on R&D, but Connelly pointed out that the spend is not evenly spread across all divisions. Enzymes are highly research intensive, for instance, whereas R&D in other areas is focused on applications, which requires lower spend.
DuPont may also be able to use some of Danisco’s set-up to avoid outsourcing some of its R&D.
Kullman also responded to prompting on how DuPont will go about integrating Danisco once the transaction closes. She explained that separate integration teams will be set up for the ingredients business and for industrial biotech.
In general, however, the process will be driven by discipline and transparency, the two principles Kullman said guided DuPont’s approach to the financial crisis.
The transaction is expected to close in early Q2 2011; Danisco’s board of directors has recommended that shareholders accept the offer.
Although the companies will go through the normal competition approvals, no hurdles are expected. Tom Knutzen, CEO of Danisco, said yesterday that the two businesses are complementary rather than competitive.