The world's largest ingredients firm Danisco announced last month a €419 million deal to buy Eastman Chemical's 42 per cent stake in the NASDAQ listed enzyme player Genencor; building on the 42 per cent stake the firm that Danisco already owned.
But for the second time in a month, on 6 April Danisco had to extend the expiration date for its $19.25 share bid of the biotech firm, after the German authorities pushed it for more information relating to anti-trust issues.
Last week, the German authorities approved the deal.
With leading market positions for a host of its ingredients, from emulsifiers (number one) to stabilisers, the Genencor deal pushes Danisco into the number two enzyme position behind the category leader Novozymes.
Novozymes dominates the market with a 50 to 60 per cent share, and Genencor in second place, with about 30 per cent.
The Genencor takeover move surprised observers, who had predicted the opposite; that Danisco might shuffle off its Genencor stake to fuel growth and acquisitions in the food ingredients sector.
Investment in ingredients is deemed essential for the ingredients group to counterbalance lost income from the sugar unit when European sugar quota reform arrives in 2006. Investment bank Goldman Sachs predicts sugar profits for Danisco could drop by as much as 40 per cent.
But Michael von Bülow, vice president communications and investor relations at Danisco asserts the acquisition fits snugly into the firm's strategy.
"We would like to expand our presence in biotechnology. This acquisition also gives us the opportunity to build on our enzyme knowledge," he explains to FoodNavigator.com.
Not only this, von Bulow claims expertise at Genencor will be transferable to other ingredients units in the group, bringing added value to a range of areas, such as production techniques.
Arguably, some of the surprise in Danisco's move to buy Genencor is sourced in the current assumption that enzymes are not high margin ingredients. A recent report from Business Communications Company claims the €1.53 billion enzyme market is currently staring at relatively flat growth of about 2 to 3 per cent, expected up to 2009.