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Can we believe the Danisco-Apax rumours?

By Jess HALLIDAY

28-Jul-2008
Last updated on 25-Jun-2010 at 09:33 GMT

Rumour, according to the Romans, is a feathered beast with a myriad eyes and tongues. Last week she went bristling through the Danish business pages, spreading the news that Danisco could be bought by a private equity firm.

Her whisperings start out as barely audible rustlings - like the crinkle of a newspaper being shaken out. Slowly they gain in volume and momentum, until they are booming out to the heavens - and all throughout cyberspace.

Just as Rumour, or Fama as the poet Virgil called her, told tales of the love affair between Queen Dido and Aeneas, last week she claimed Danisco was being wooed by private equity firm Apax.

To hear Virgil tell it, Rumour is a pretty shady character. Just how much trust we can put in what she says is a matter of circumstance and context. The story of Danisco and Apax makes for a rather better case study than Dido and Aeneas.

First, the Danish pink sheets confidently pronounced at the end of May that Danisco would announce the sale of its sugar business before its executives set sail for their summer holidays. Bidders for the business were named as Nordzucker and Tereos.

Then sure enough, on 15 July Danisco announced that it had struck a deal with Nordzucker. If Rumour got it right that time, one would be forgiven for thinking she might just be on the money again.

Certainly the stock market seemed to think so. The day after the first tongues started wagging the stock price soared eleven per cent to DKK313.5 (around €42) - its biggest leap since 1989.

So far both Danisco and Apax have been keeping quiet about any liaisons they may have had. Apax declined to give any comment to FoodNavigator.com.

As Tom Knutzen, CEO of Danisco pointed out in a Bloomberg interview, if the public company had received a bid from anyone, it would have been obliged to let shareholders know. He blamed the summer heat for Rumour's rampant activity.

But whatever the official line is, now that it is shedding the sugar business Danisco is shaping up to be just the kind of streamlined, growth-oriented company that private equity would find attractive.

Following a review of its strategy and priorities, as of Q1 2008/9 Danisco has a neat new structure in place for Food Ingredients, which is now divided into Enablers (emulsifiers, gums and systems) and BioActives (sweeteners and cultures).

Nonetheless, whether or not management actually intended to woo private equity firms by getting into shape is questionable. It has said it will use most of the revenue from the sale of the sugar business to reduce debt.

A private equity firm, on the other hand, may use it to be more aggressive in the market place, snapping up other value-added ingredients players for even faster, bigger growth.

So - Danisco and Apax, true or not? Alas, FoodNavigator does not share Virgil's storyteller's hindsight.

But while Dido ended up building her own suicide pyre after being cruelly abandoned by Aeneas, Danisco could stand to profit considerably from a private equity affair.

Jess Halliday is senior editor of FoodNavigator.com. Over the past twelve years she has worked in print, broadcast and online media in both Europe and the United States. She now lives in France, and was thrilled that her local supermarket placed a larger-than-life cardboard cut-out of Thierry Henry over the onions this weekend.

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