Ponts CEO on Executing a Cross Border Acquisi

By Team Adi Godrej Janice , Nitin, Satish

 BRIEF ABOUT THE CASE

DUPONT A CONGLOMERATE WAS PLANNING ON ACQUIRING DANISCO.

BOTH THE COMPANIES HAVE THEIR BASE IN DIFFERENT COUNTRIES
THE CEO ELLEN KULLMAN DETAILS OUT THE CHALLENGES THEY FACED,
STRATEGIES THEY USED AND HOW THE ACQUISITION TURNED OUT TO BE A
SUCCESSFUL ONE
 STRENGTHS

DUE DILIGENCE TEAMS WHO WORKED ROUND THE CLOCK

EVERY SINGLE OPINION WAS HEARD OUT
DU PONTS ACCOUNT BOOKS IN 2010 WERE DOING GOOD TO GO AHEAD
WITH ACQUISITIONS
COMPANYS ADAPTABILITY TO COST CUTTING AND STREAMLINING
 WEAKNESSES

LIMITED TIME FOR EVALUATING DANISCO

ELLEN KULLMAN APPOINTED AS NEW CEO EXACTLY AROUND THE LEHMAN
BROTHER FALL
SOME OF THE BUSINESSES UNITS WERE FAILING
 OPPORTUNITIES

OTHER COMPANIES NOT COPING QUITE WELL WITH RECESSION.

PROBABILITY OF OTHER COMPANIES PUTTING ASIDE THE M&A CHOICES WAS
HIGH
DANISCO GROWING STRONGER BY 2010 ACQUISIOTN RESULTS WOULD BE
BETTER THAN THAT OF 2005
 THREATS FACED

DANISCO HAD ALREADY BEEN APPROACHED BY OTHER COMPANIES FOR M&A

ACQUISITION DID NOT MATERIALIZE FOR CLOSE TO 10 YEARS DUE TO
VARIOUS ISSUES ESP. CROSS BORDER ACQUISITIONS
DANISCO HAD SET A DEADLINE TO ALL BIDDERS FOR OFFERS (JAN 7 TH 2010)
RECESSION HAD BEGUN
 STRATEGIES USED

SPLITTING TEAMS INTO TWO FOR EVALUATING ISSUES AND OPPORTUNITIES

IN DANISCOS A) BIOTECH BUSINESS AND B) NUTRITION AND HEALTH
DIVISION
DIVESTED CONOCO OIL AND NATURAL GAS SUBSIDIARY
STARTED FOCUSING ON BIO-SCIENCES
CHANGING PEOPLES PERCEPTIONS FROM PURELY CHEMICAL
COMPANY TO A CONGLOMERATE
 QUESTIONS ELLEN PONDERED?

WHAT VALUE WE (DUPONT) PUT ON THE PORTFOLIO?

WHAT ARE ITS (DANISCO) SEGMENTS, MARKET POSITIONS & MODELS FOR
COMPETING?

COMPOUDING THE PROBLEM LACK OF TIME TO ADDRESS THE ABOVE.

FALL IN LOVE WITH THE DEAL? OR

FALL IN LOVE WITH WHAT THE DEAL DOES FOR THE COMPANY?
 THE LONG HAUL

DUPONT PROPOSES TO BUY DANISCO FOR 665 KRONER/SHARE (I.E. $6.3

BILLION + 25% OF EXISTING SHARE PRICE OF 530 KRONER)

THE DEAL IS THROUGH.

BUT, IS IT DONE YET?

 DIFFICULTIES
SECURING REGULATORY APPROVALS
o NEED REGULATORY APPROVALS FROM MORE THAN10 COUNTRIES
o 4 MONTHS FOR THIS EXERCISE

CONTROL OVER COMPANY

o DIFFERENT COUNTRIES DIFFERENT % REQUIREMENT FOR CONTROL
o US - 51%, DENMARK 80% (CONTROL) BUT 90% (TO DELIST)

RESULT:
SHAREHOLDERS, ESP HEDGE FUNDS, MANIPULATE SHARE PRICE TO INCREASE
OFFER FROM DUPONT.
ONLY 48% AGREED FOR THE DEAL.
 RE-EVALUATE
FLOOD OF DOUBTS ON THEIR EVALUATION
o WAS THERE MORE VALUE THAN THEY (DUPONT) THOUGHT?
o WAS THERE ANYTHING THEY DIDNT UNDERSTAND (FAIR OFFER NOT ACCEPTED)?

BOARD AGREED FOR RE-EVALUATION.

FIND GROUPS LIKELY TO TENDER IF OFFER PRICE WERE TO BE INCREASED.
HOLD FIRM AND BE PREPARED TO WALK AWAY IF SHAREHOLDERS DONT
SUPPORT FURTHER.
FINAL REVISED OFFER: 700 KRONER/SHARE ($7 BILLION) BUT 80%
SHARES TENDERED.

RESULT:
o 92% OF SHARES TENDERED.
 ESSENCE

EFFECT OF THE DEAL :

1. 20.5% INCREASE IN REVENUE (FROM $31505 MIL TO $37961 MIL IN ONE YEAR).
2. 15.3% INCREASE IN INCOME BEFORE TAX ( FROM $3711 TO $ 4282).
3. ACHIEVE INITIAL COST SAVING TARGET OF $130 MIL A YEAR AHEAD OF
SHCHEDULE.

FIND THE RIGHT COMPANY TO ACQUIRE PRICE AT VALUE EXECUTE

INTEGRATE FIND SYNERGIES.
 QUOTING ELLEN KULLMAN

BIG, BOLD STRATEGY

WORKED ON IMPROVING VALUE OF OUR EXSISTING NUTRITIION AND HEALTH
BUSINESS AND WE FOCUSSED ON CREATING BROADER VALUE FOR COMPANY.
DANISCO WAS A COMPLIMENTARY FIT.
THE RIGHT STRATEGIC ACQUISITION, AT THE RIGHT PRICE, IS WORTH THE
WAIT.