Elliott Associates, the $17 billion U.S. hedge fund, added its voice to demands that chemicals giant DuPont raise its $5.8 billion bid for Danisco, the Danish maker of food ingredients and enzymes.
The dispute pits DuPont Chief Executive Ellen Kullman against investors hoping -- as with earlier Scandinavian takeover sagas involving Cisco, Nestle, Schlumberger and others -- that the overseas suitor can be forced to sweeten its bid.
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Both target and acquirer say the bid, following a discreet auction, was the best of several offers and provides the best possible value for shareholders.
Danish newspapers quoted Kullman last week as saying she would not raise the offer and last night she reiterated it was "very fair and fully valued.
However, Elliott's London arm wrote to Danisco's board saying the 665-crowns-a-share offer was a "shameful betrayal" of shareholders and was "very unlikely" to succeed. It said it owns about 1 percent of the stock.
Elliott said Danisco was worth 675 crowns a share on a standalone basis, using a discounted cash flow analysis, or 702 crowns based on the forward valuation multiples at which Danisco's peers trade.
It says the offer ignores Danisco's strong market position, the room to boost margins, and the synergies DuPont will enjoy, and does not offer a premium for control of the company.
Morgan Stanley has estimated DuPont could afford to boost its offer by as much as 14%, to 760 crowns a share.
DuPont and Danisco announced the deal on January 9. The offer runs to February 22, and depends on DuPont winning 90% acceptance from shareholders, although it can waive that down to 80%.
Elliott's letter follows rejection of the deal by a unit of Swedish banking group SEB that holds about 2%, and from Danish AP Pension, with 0.2 percent. The Danish Shareholders Association said last week that skepticism was spreading among the thousands of small investors it represents.
"We have received the letter and we are in a dialogue with Elliott as we are with many shareholders," Danisco spokesman Carl Corneliussen said. He declined to confirm Elliott's stake.
Elliott, founded by Paul Singer in 1977, is also pushing for Actelion, Europe's largest biotechnology firm, to shake up its board and explore a sale.