U.S. chemicals giant DuPont came under more pressure to raise its $5.8 billion bid for Denmark's Danisco after U.S. hedge fund Elliott Associates joined shareholders opposed to the offer.
Elliott wrote to the board of Danisco, which makes food ingredients and enzymes, saying DuPont's 665 crowns-a-share offer was a "shameful betrayal" of shareholders and was "very unlikely" to succeed.
The $17 billion hedge fund said it owns about 1 percent of Danisco. Shareholders owning about 2.2 percent have already rejected DuPont's bid and Danske Bank, which holds 1.7 percent, said on Friday it was unimpressed by the offer.
The dispute pits DuPont Chief Executive Ellen Kullman against Danisco investors hoping that the overseas suitor can be forced to sweeten its bid --as with earlier Scandinavian takeover sagas involving Cisco, Nestle and Schlumberger.
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 in the letter from Elliott's London unit, the hedge fund 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.
Danisco shares traded up 0.6 percent at 661.50 crowns at 1555 GMT, but still 3.50 crowns below the offer price.
Elliott said 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 percent, 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 percent acceptance from shareholders, although it can lower that to 80 percent.
Elliott's letter follows a rejection of the deal by a unit of Swedish banking group SEB that holds about 2 percent, and from Danish AP Pension, with 0.2 percent. The Danish Shareholders Association said last week that scepticism was spreading among the thousands of small investors it represents.
Danske Capital, a unit of Danske Bank that controls 1.68 percent of Danisco's shares, said on Friday it was not enthusiastic about the offer, but had not decided what it would do.
"We are not impressed with the bid, but on the other hand it is not a completely unacceptable offer," Danske Capital portfolio manager Jesper Poll told Reuters.
"I cannot say what we will end up doing, but I am lukewarm (toward the bid)," Poll said.
Danisco spokesman Carl Corneliussen said the company had received the letter and is talking to Elliott, as it is with many shareholders. 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.
(Reporting by John Acher in Copenhagen and Quentin Webb in London; Editing by Douwe Miedema and Erica Billingham)