UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
SCHEDULE TO
Tender Offer Statement
under Section 14(d)(1) or 13(e)(1)
of the Securities
Exchange Act of 1934
(Amendment No. )
GENENCOR INTERNATIONAL,
INC.
(Name of Subject Company (issuer))
DANISCO A/S
(Name of Filing
Person)(offeror)
Common Stock, par value $0.01 per
Share
(Title of Class of Securities)
368709101
(CUISIP Number of Class of
Securities)
Jorgen Rosenlund, Esq.
Danisco
A/S
Langebrogade 1
P.O. Box 17
DK-1001 Copenhagen
K
011-45-3-266-2000
Andris Vizbaras, Esq.
Carter
Ledyard & Milburn LLP
2 Wall Street
New York, New York
10005
(212) 732-3200
(Name, address, and telephone numbers
of persons authorized
to receive notices and communications on
behalf of filing persons)
Calculation of Filing Fee
Transaction valuation* | Amount of filing fee | |||||||||||||
N/A | N/A | |||||||||||||
*
Set forth the amount on which the filing fee is calculated and state how it was determined.
Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
Amount Previously
Paid:______________________
Form or Registration
No.:______________________
Filing
Party:_________________________________
Date
Filed:__________________________________
Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the statement relates:
third party tender offer subject to
Rule 14d-1.
issuer tender offer subject to
Rule 13e-4.
going-private transaction subject to
Rule 13e-3.
amendment to Schedule 13D under
Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results of the tender offer:
2
Item 12.
Exhibits.
Exhibit 99.1 | Transcript of January 27, 2005 Conference Call. | |||||
3
DANISCO CONFERENCE CALL JANUARY 27, 2005 This transcription is for TDC Conference Call with host Alf-Duch Pedersen on January 27, 2005 at 15:30 CET Confirmation # 476186. Operator: `Welcome to the Danisco Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. I would now like to turn the call over to your Host Mr. Alf Duch-Pedersen'. Alf Duch-Pedersen: Thank you very much and good afternoon to everyone. I am joined here with our CFO, Soren Bjerre-Nielsen and Leif Kjaergaard*, who is our Vice President for Innovation. We would like to go through the announcement, which was made earlier this afternoon and that is our intention to acquire 100% of the shares in Genencor International. Let me start with the strategic rationale for doing this. As you know Genencor is a biotech company and has a principal position in enzymes, both development and production and also marketing. We cooperate with Genencor both in the feed and the food area. In our strategic forward thinking it is very important for us to have a stronger base in food enzymes. So we expect that if it is possible to bring together both their technology and our technology then we could bring many more new products from food enzymes and feeds into the marketplace and thereby significantly enhance the performance of the joint companies within the important product area. I think it is needless to say that we know Genencor very well. We think it is a great company and actually we think we will fit very well together. Before we go into more details let me just remind everybody that this is an announcement which covers that we have announced that we will try and acquire the vested shares of Genencor. We have to put forward listing particulars or particulars within ten days so there are certain details, which we are not able to discuss today, at least we were advised not to discuss some of the details that you may ask us and therefore we will have to deny. But let us see how this moves forward. As you all know we have our mission and strategy in Danisco. We want to focus in on the food sector globally and we want to become the leader within our industry. We will do that both through organic growth and also through research and development and acquisitions. I think Genencor actually touches on all of these three issues. Genencor is very heavily into research and development and can post also very strong organic growth. If we look at the matrix, which at least I have been using for the last many years when I am together with investors and other interested parties. In Page 1 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 our industry what this potential acquisition will do for us is that it will greatly enhance our technology platform to bring new enzymes to the marketplace, both as single stand-alone food ingredients but also as enzymes to be blended with other of our ingredients making functional systems. We have through the strategic corporation we have with Genencor and the knowledge of our market seen a lot of possibilities for which we actually need to move much faster than we are capable of doing alone at the present. So for us this is about getting much more into food and feed enzymes. At the same time of course Genencor is one of the world leaders on industrial enzymes, which is also a very interesting area. This will be for us possible for them also to move forward into industrial enzymes. When Leif Kjaergaard get a word he will tell you some of the prospects that we see and how we see that also going forward. The healthcare part of Genencor we have from the start been supportive of. However, we have to realize today that it takes much longer time than we thought and therefore we have and we will discuss with management when and if we can get together how to find a long-term solution for that part of the business. But all in all a very strong enhancement of our technology platform. With the two latest acquisitions we have now enhanced our capabilities within cultures and now within enzymes fermentation technologies open up an array of possibilities as we move forward. Genencor if you look at it at a glance it has roughly $400 million in total revenues and it is amongst the largest biotech companies in the world, which operates eight bio-post* manufacturing sites, has four million liters of capacity, a capacity which is amongst the most efficient in the world and which would break the capacity, which we have ourselves, many patents, which protect their positions and also a very strong technology platform. There are catalysts of the bio-based economy. If you really look forward there is bio-energy, there is bio-safety, there is defense and then biomaterials. Mr. Kjaergaard will go deeper into these areas. Also it is a global company or at least based on many continents of the world, places around the world where we already are also. There will be certain cost synergies, which we can line up together. We are looking for cost synergies within the sales and administration side but most of all also bringing our products at a lower cost to the marketplace. Genencor has a very strong knowledge of production skills. I will now hand over the work to Leif and he will take you through some of the technological rationale and strategy thinking for this potential acquisition; over to you Leif. Leif: Thank you very much. Yes I have the brochure explaining a little Page 2 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 bit about the technologies behind that and what is common between Genencor and Danisco. If you look on this first slide we are presenting here then you should and it is maybe not the normal thing but start from the right side where we have listed the different sales. What we see from the two joint companies we are selling into feed and fruit. We are doing that a lot in Danisco and Genencor is doing a little bit. They have a lot of sales in grain processing. That means converting crops; that can be corn, that can be barley, that can be wheat into glucose syrups for the high fructose syrup that is used a lot as a sweetener in the soft drink industry worldwide and they have big sales into the industrial segment with detergents and other things. So therefore, I think that is something very different from what we are doing. For the two other ones, the food industry and the grain processing they are all activities that are converging agricultural products into products that can be consumed by consumers. So a lot of the applications and a lot of the sales and marketing activities for business or enzymes for the grain processing and for the food and for the feed industries they are very much the same. So there is a lot of overlap and a lot of synergies and a lot of good possibilities for enhancing our position in this area. In the industrial segment, the detergents etc. they are of course different but the enzymes, as I will show a little bit later they are very often of the same nature as the enzymes we are using in food and feed. Then the big part to the left the discovery, the optimization and the production those are technology areas where Genencor has an extremely strong position sitting among the absolute leaders in the world. We are as strong in some of these areas and we have been working together with Genencor for the last four or five years to develop new enzymes because we know they have this very strong position in this. So that is the rationale for that. There are a lot of commonalties in the development, some in the application areas and then we diversify out through different areas to leverage on the basic technology. Genencor has very strong expertise in what we could use a common word protein engineering. Enzymes are proteins. Proteins are some of the natural building blocks that we all have in us that are in all plants and all animals and so on. They can catalyze and so they can run faster. They are some of the leaders in the world to make these enzymes more efficient, to produce them cheaper and to obtain exactly the results that we want to obtain when using these enzymes. This is the range of skills they have coloring the different things that I mentioned on these slides here, immunology, targeting genomic etc. on the list you have left in the slides. Immunology, that gives them the knowledge about how Page 3 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 the different things can be looked upon as any of the products coming into the human body. That is something that is very important to know when you should know about products whether they are toxic or non-toxic when you are using them. You can also have the knowledge to use when you want to develop products that can give resistance or can give input or against some specific products. Genomic in molecular biology that helps them on a very big tool to use a very, very big and diverse collection of microorganisms they have collected from all places in the world where they can go to very extreme areas to find enzymes that can behave or microorganisms living under extreme conditions. Thereby they are often producing enzymes that can work under extreme conditions as well. They can use that. They can select specific proteins and select specific enzymes that can be used in different areas. They have a fantastically strong position in proteomics. Proteomics is an area where you try to get a knowledge about proteins, how they are behaving, how they are built up, how you can split them into small pieces and see what are the properties of the different features of a protein molecule. Using this they can use directed molecular evolution from there to select from the diverse collection or microorganisms the specific organism that has the properties that we want to use in production of different enzymes. Protein express, that is the final step in this to be sure we get the enzymes in sufficient amount that is feasible to make a production or manufacturing of this. There also Genencor has a very strong position. Not only do they have the organisms and the knowledge but they also have a lot of the IPR that is necessary to really operate in this area. As you know and have been mentioned shortly before they are producing enzymes for a number of different areas. If you look at that you could say that is very different than what we are doing. But if you are looking at these different areas clearly textiles, starch processing and so on in the list to the right side of this slide here you will see if we go into details cleaning and food. Those can be commonalties. Cleaning that is also to remove dirt from your cleans. That is very often protein containing dirt you have in your clothes. Those are the enzymes that are necessary to degrade protein. That is in principle the same enzymes that we are using when we are making a clotting of the new protein. So that is the same type of basic knowledge that is needed to know in order to manipulate the development of the new enzymes. You can also take an area as perhaps grain processing and hand cleaning. When you have remnants on your dishes when you go to the dishwasher and you add a dish washing agent containing enzymes Page 4 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 that is very often an enzyme that is strongly related to enzymes we are using when we are improving the dough for a bread that would go through an industrial baking process. It is also the same nature of enzymes that are used when you want to degrade the starches in corn in order to produce syrups for the soft drink industry. In this way we could continue and see there are a lot of similarities between the different products that they are developing, we are developing and sending to different markets. Beside this the biotechnology is really a growing industry. Today it is calculated that about 5% of all products sold in the chemical area they are derived from biotechnology. That means that is what you call specialty chemical products. One of the biggest products as you recall is the ethanol or the alcohol that is used for drinking purposes but also for many other purposes. That is the biggest product. It is a lot of organic acid, nictric acid. It is an amino acid that is used also as additives in the feed industry. Enzymes are a big group of this and it is also raw materials for the flavor and fragrance industry where we are at present. This industry is by some analysts identified as one of the strongest growth areas in the future. As mentioned here it could come up to be a double size of the chemical industry in the future. Some of the areas that are in the emerging markets for the use of biotechnology and specifically for enzymes are mentioned here, sales and production, ethanol's and so on. I will talk a little bit about some of these examples, not all of them. The next one we have one example here where there has been a use of enzymes for cleaning and not only simple cleaning but also for advanced cleaning. One of the big problems we have seen in Europe in the food industry for the last year that has been the BSE outbreak starting in England. That is caused by what is called a prion. A prion is a small protein molecule and what is more natural than the leading producer of enzyme-degrading proteins and they are looking into this. They have done that together with a public institution in the UK where they have developed a specific enzyme for degrading prions so they can clean and so it can be used more safely. The same way they have together, which has found enzymes that can be used for degrading waste from nerve gases, etc. The personal care area is also a strong growth area. There is for the teeth cleaning and whitening area we know already when you go out and buy toothpaste some of them are with enzymes and those enzymes are for the cleaning and for the whitening of teeth. That is the enzymes Genencor is producing but also enzymes we are producing in Danisco. In the same way enzymes can be used Page 5 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 for cleaning skin and for hair care so that you can get a really nice and natural hair to look at and get a soft and nice skin also. One of the last areas I would mention here is the silicone biotechnology area. Dow Corning and Genencor have together developed this area. Dow Corning was in fact one of the founders of Genencor. The cor name comes from Corning and Genen comes Genentech; they were the two founders back in the early 80's. They have a strong knowledge now, Corning, in silicone technology in solid face* chemistry. This combined with biotechnology can lead to the development of very interesting new sensors, that cobbled together with the emerging nanotechnology that we see in the US, we see in Europe, we see in Denmark where we are taking part on the Danisco side with such activities that could be fantastic new possibilities for developing different tools that can be used for the food safety area, for detection of issues in the food safety area. The last one that should be mentioned shortly that is the healthcare area where there has been strong progress in Genencor over the last years. They have already in early 2004 come with the first product going into clinical trials. It is a therapeutic vaccine for Hepatitis B that is in the first clinical trial. They have later on spun that off or delivered that to Enogenetics. They have had a collaboration with them and now they are focusing more on improving their development pipeline and new products that can follow-up on what they have done so far. All in all if we look at what would be acquired then it is in four areas. There is the food and feed enzymes; Genencor has minor activities in the food and beverage areas. They have more significant activities together with the joint development activities we have and they have for many years been producing most of the enzymes we have been selling for the feed industry. That will be transferred completely of course with this acquisition. Then they have a strong area in the industrial enzymes in the areas that we have mentioned already. Then there are the different ingredients that can be used in connection with healthcare. Alf Duch-Pedersen: Thank you Leif and now over to Soren Bjerre-Nielsen, who will go through the transaction details. Please remember this has been our intention, which has been announced today so there is still some work ahead of us. Soren Bjerre-Nielsen: Thank you. Let me begin by reminding you that Eastman Processing holds 25 million of common stock, which is approximately 42%, as does Danisco. The remaining 16% of the Page 6 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 common stock is listed at NASDAQ. Both Danisco and Eastman in addition to this own preferred stock with some accumulated dividends. That means that we have actually had to work with two parties and we now have an agreement with Eastman that we will acquire their shares in Genencor for a price of $15 a common stock and we will pay them $44 million for their preferred stock. The preferred stock including accumulated dividends has a face value of approximately $92 million. So all in all we will pay Eastman $419 million. Further, we have agreed with the special committee of the Genencor board that they will recommend that we make an offer to the outstanding shareholders of $19.25 US dollars per stock. This is subject to us acquiring at least a majority of the outstanding shares; that is the whole deal. This will also be contingent upon certain regulatory approvals and some other minor conditions. The cash payment that we will have to pay in total will be approximately $600 million and we expect to complete in May 2005 but we are certainly aiming at doing it quicker. We have the credit facilities in place and we will finance that through our existing banking credit facilities. I will finalize this by just mentioning that we will now go through a tender offer period. We are in the process of preparing the tender offer documents that will be filed with the SEC in the USA and will be made available to all outstanding shareholders. The situation requires that I have to be pretty limited in information about the effect on Danisco numbers. This also has to do with the US rules and regulations so this will be very limited. However I think there are a number of key and important elements to mention here. First of all Danisco will now have full access to the very strong cash flow generation in Genencor. Secondly you will also see that our profit of Genencor will move from financial items and the 100% that we intend to acquire will be part of our EBIT and thereby part of whatever goes into multiples. You will see our platform for growth being increased and we will see the operating margins being positively impacted from the integration of the Genencor bio-products business into the existing Danisco business. Alf Duch-Pedersen: So by doing this we will actually in the course of six to nine months be capable of bringing the products and technology from Danisco and Hansen, within the same company. This is definitely going to give us higher growth, new product areas, higher margins and immense possibilities for advancing the growth in the food and feed enzymes. The slide that is on the screen right now just shows the position of these enzymes where they are and also the growth in comparison with other food ingredients at this point in time. So all Page 7 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 in all this is going to yield a much better and stronger performance from our company. If we look at what the two parties could bring to the party it is from our side a strong platform, which is a global platform with a global sales and distribution network, direct access to customers, a lot of application knowledge in the food ingredients and sweetener area. Then of course we have many customers who can also buy industrial enzymes and other products off of Genencor combined with us in the future. What Genencor brings to the party is a world class R&D culture second to none. They are a leader in enzyme production. They have a much lower cost base in enzyme production than we have ourselves so the already existing business will be much more profitable. Then of course there is the cross-fertilization in the food and the industrial enzymes and then how we look into the future together and bring new products to the marketplace. We will actively become quite a strong player in bio-ingredients because under bio-ingredients we also have the food safety, which we are already supplying, our culture products, the enzymes that we are supplying and now as we go together with Genencor also their products. It is a best in class worldwide sales network that we are offering and it can bring the products quicker and faster to the marketplace. So we are we believe if we are brought together uniquely positioned for future growth. This is what we planned to tell you. Again, there is a very strong strategic rationale for doing this. It is of course a view on how the business goes forward within food and food ingredients in the world, which we look at today. Then it also brings this new business to us, the industrial enzymes. It is now time for questions. We have another 15 or 20 minutes available if there are questions. We could then begin now please. Operator: `Thank you. We will now begin the question and answer session. If you have a question please press star one on your touch-tone phone. If you wish to be removed from the queue please press the hash key. Your questions will be queued in the order that they are received. Once again if there are any questions please press star one on your touch-tone phone. [Participant No. 1] from [ ] is online with a question.' Participant No. 1: This is [Participant No. 1] from [ ]. I have two questions. FIRST OF ALL YOU WERE TALKING ABOUT THE HEALTHCARE ACTIVITIES. CAN YOU BE A BIT MORE CONCRETE; WHAT ARE YOU LEANING TOWARDS? ARE YOU LEANING TOWARDS CARRYING THROUGH THE PIPELINE WITH GENENCOR OR LEANING TOWARDS DIVESTING THE Page 8 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 PROJECTS OR CLOSING THEM DOWN? THEN SECONDLY CAN YOU INFORM US OF THE NET CASH POSITION IN GENENCOR FROM TODAY? Alf Duch-Pedersen: To the first question about where we are leaning I am afraid I cannot be much more specific than what I said at this point in time. We have initially supported that and we think it is taking a long time and therefore as an investor we would like to have a discussion with the management and then together find a more long-term solution for this platform, which actually we believe can carry a bit of value. On the cash position front and to the third quarter release that Genencor issues and that you will find on the web site where you can get more financial details. Going to the end of the third quarter 2004 they had approximately 100 million US in cash. I think it is important to remind you that they also have a number of issued options and some of the cash will be used for paying for the options based on the offer made to the outstanding stockholders. Participant No. 1: Thanks a lot. Alf Duch-Pedersen: You are welcome. Operator: [Participant No. 2] from [ ] is online with a question. Participant No. 2: I have a few questions here. YOU SAID THAT MARGINS WILL BE POSITIVELY AFFECTED BUT IF I LOOK AT BIO-PRODUCTS IN GENENCOR IT WILL HAVE AN EBIT MARGIN OF AROUND 12% FOR THIS YEAR. YOUR EBIT MARGIN IN INGREDIENTS BEFORE ON-OFFS WILL BE AROUND 14%. IF WE SPECIFICALLY LOOK AT Q4 YOU WILL HAVE A SINGLE DIGIT PROFIT MARGIN IN GENENCOR. SO I WONDER WHAT KIND OF ASSUMPTIONS YOU ARE MAKING FOR THAT STATEMENT? MY SECOND QUESTION GOES TO THE FOOD AND FEED ENZYME BUSINESS OF GENENCOR. COULD YOU PLEASE INFORM US WHAT PROPORTION OF THE TOTAL BIO-PRODUCT REVENUE IS RELATED TO THESE TWO BUSINESS AREAS, THANK YOU? Soren Bjerre-Nielsen: I will begin by addressing the question on the margin. When you look at the margins from the estimated or guided figures for Genencor in 2004 you will have to be aware that there are some one-time items in there. The statement I made was based on the expectations going forward. Participant No. 2: So that is 2005. I MEAN THE SPECIAL ITEMS ARE PRIMARILY AN INSURANCE SETTLEMENT GAIN OF $8.3 MILLION BOOKED IN Q1? Soren Bjerre-Nielsen: There are also a number of one-time costs. I will not be able to give you any kind of guidance on what will happen next year Page 9 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 because Genencor has not given any guidance for 2005 so far. Participant No. 2: BUT IS IT CORRECTLY UNDERSTOOD THAT IF YOU ASSUME THAT IT WILL AFFECT YOUR MARGINS POSITIVELY THEN THE EBIT MARGIN IN GENENCOR SHOULD EXCEED LET US SAY 13% OR 14% NEXT YEAR IS THAT CORRECT? Soren Bjerre-Nielsen: I will leave that calculation to you and refer to what I just said. I will not go into details on how Genencor would look next year. Alf Duch-Pedersen: The second question Leif will give an answer for that. Participant No. 2: When you say the food and feed you can include the whole grain processing area into this also so it is a significant part of the Genencor activities that are going into food-related and feed-related activities. Alf Duch-Pedersen: That in the feed business we already have a strong cooperation because all the enzymes, which are the animal nutrition business is selling is actually produced by Genencor so there is a very strong connection there. Participant No. 2: BUT YOU SAY YOU ARE PRIMARILY INTERESTED IN THE FOOD AND FEED ENZYME BUSINESS. I WONDER WHAT PROPORTION OF REVENUE IN GENENCOR THAT REPRESENTS? Alf Duch-Pedersen: It is not just what is represents today. It is also what it can represent tomorrow. Participant No. 2: MY QUESTION IS WHAT IT REPRESENTS TODAY. Soren Bjerre-Nielsen: I am afraid you will have to address that question to Genencor. Participant No. 2: Thank you. Alf Duch-Pedersen: Remember Genencor is a NASDAQ listed company, next question. Operator: `Once again if there are any questions please press star one on your touch-tone phone. [Participant No. 3] from [ ] is online with a question.' Participant No. 3: Good afternoon; a couple of questions. GOING BACK TO THE PREVIOUS QUESTION REGARDING MARGINS COULD YOU JUST CLARIFY WHAT MARGIN LEVEL WE ARE TALKING ABOUT IS THE FIRST QUESTION? THE SECOND QUESTION IS YOU ALREADY ARE A BIG PURCHASER OF Page 10 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 ENZYMES FROM NOVENZYMES*. DO YOU SEE THAT BEING A PROBLEM GOING FORWARD AFTER YOU ACQUIRE GENENCOR THAT YOU WILL NOT BE ALLOWED TO BUY ENZYMES FROM NOVENZYMES* FOR YOUR FOOD BUSINESS? THIRDLY WHAT DO YOU SEE AS THE MOST LIKELY CONSOLIDATION DATE? FOURTHLY, IF WE LOOK IN TERMS OF SYNERGY I UNDERSTAND YOU CANNOT GIVE ANY NUMBERS BUT COULD YOU GIVE ANY THOUGHTS ON WHAT POTENTIALLY YOU SEE FROM PLANT CLOSURES, FROM MOVING RESEARCH FROM DANISCO INTO GENENCOR, FROM GENERAL COST SAVINGS AS WELL AS THE BIOTECH SIDE, THANK YOU? Soren Bjerre-Nielsen: As for the margin, the margin we had in mind was the operating margin and this is as I said before not looking at any specific guidance for next year but this is as we see. Participant No. 3: That is an EBIT margin. Soren Bjerre-Nielsen: On the consolidation date that will depend on the process of the tender offer. The offer will be submitted within not too long a period and it has to run for at least 30 days but normally there will be a number of inquiries, which means that it might take longer. We were targeting the end of March, which I understand from and is realistic. It might be before and certainly it has to be before the end of May 2005. Alf Duch-Pedersen: Then there was a question about the enzymes that we buy from Novenzymes* today. Well these are of course early days so I suppose that the trading will go on at least for some years but we will have to see because we actually see the reasonable big customer there and let us see how their reaction is and then we will take it from there. Participant No. 3: Alf can you hear me? Alf Duch-Pedersen: Yes. Participant No. 3: IF WE ASSUME THAT THEY REACT NEGATIVELY AND SAY THEY WANT TO BREAK OFF WITH YOU RIGHT AWAY WHAT SORT OF NEGATIVE IMPACT WOULD THAT HAVE ON YOUR CURRENT BUSINESS ENVIRONMENT? Alf Duch-Pedersen: If that is possible...I do not even think it is legal what you are suggesting. But anyway if it were possible it would of course have a negative impact. Participant No. 3: So basically you are saying there are some contractual contracts regarding this area and therefore nothing can happen in the short- Page 11 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 term. Alf Duch-Pedersen: This is early. Participant No. 3: Everything being equal nothing should happen. Alf Duch-Pedersen: So let us see how business people react. Soren Bjerre-Nielsen: It was mentioned or maybe we can draw your attention to the fact that if you look at the last 12 month's published EBITA figure for the bio-products business of Genencor that is roughly $95 million or $96 million. The safe number that Alf mentioned before indicates that on an EBITA margin level we are certainly in the 20% to 25%. Participant No. 3: But your comment was basically regarding to the EBIT level. Soren Bjerre-Nielsen: Yes it was but I am just reminding you because you might not have these figures but they are available by now. Participant No. 3: And then a follow-on question regarding what sort of cost synergies you are potentially looking at without going into numbers. Alf Duch-Pedersen: There is actually quite a series of synergies to be looked at. One of them is that Genencor has better production technology and skills than we have for instance. So the enzymes, which we already produce they can produce at a lower cost than we can. There is of course some on the administration side and there is also the cost synergies on the global sales side. So there are a few but this acquisition or potential acquisition is driven partly by the cost synergies but even more about the possibilities when one looks forward. Participant No. 3: What about the internal research and development in enzymes? Alf Duch-Pedersen: It can be mentioned as well but as you know these are every day and we were advised not to go into too many details so I am afraid I will not go into many more details. [Participant No. 3], I am sorry. Participant No. 3: Thank you very much for your answers. Alf Duch-Pedersen: Are there any last questions out there? Operator: `[Participant No. 4] from [ ] is online with a question'. Participant No. 4: Good afternoon. I COULD NOT HEAR VERY WELL DURING THE Page 12 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 CONFERENCE SO IF YOU HAVE ALREADY ANSWERED, SORRY ABOUT THAT. BUT WHEN YOU SAY YOUR MARGINS WILL BE POSITIVELY AFFECTED ARE YOU TALKING ABOUT THE INTEGRATION OF THE WHOLE BUSINESS OR PART OF THE BUSINESS? Alf Duch-Pedersen: I specifically mentioned that the products would positively impact it, which is not the healthcare business. The healthcare business as you might know is an investment mode. In other words they do not have very significant revenues. They are investing in R&D. Participant No. 4: YOUR PRODUCT BUSINESS AND YOU ARE LOOKING AT THE FUTURE OR ARE YOU LOOKING AT WHICH SOLUTION FOR THE HEALTHCARE BUSINESS; IS THAT RIGHT? Alf Duch-Pedersen: [Participant No. 4], I said in the introduction that we would talk together with the Genencor management and find a longer-term solution for the bio-products business or for the healthcare business, sorry. That is as far as we can comment I believe. Participant No. 4: SO LOOKING AT THIS OPERATION WHERE YOU ARE REALLY TRYING TO BUILD A TECHNOLOGY PLATFORM IN ENZYMES OBVIOUSLY CAN WE ASK OURSELVES THE SAME QUESTION REGARDING YOUR FLAVORS BUSINESS? WOULD YOU BE IN THE FUTURE; THAT IS MORE LONG-TERM NOW ALSO INTERESTED IN BUILDING ON FLAVORS? BECAUSE IN THE PAST YOU HAVE ALWAYS SAID YOU ARE INTERESTED IN FLAVORS BUT NOT IN FRAGRANCES. IS THAT BECAUSE THAT IS BASED ON THE FOOD CLIENTS AND NOW FOR ENZYMES YOU ARE INTEGRATING ENZYMES BASED ON THE TECHNOLOGY AND THAT MEANS THAT YOU ARE STRETCHING YOUR FOOD CLIENTS TO ALSO HOME AND PERSONAL CARE CLIENTS? SO WOULD THE SAME RATIONALE APPLY TO FLAVORS PERHAPS IN A LATER STAGE? Alf Duch-Pedersen: You have a very good point there. If you look at the competition of our ingredients if you take the emulsifiers we just last week announced our Soft range product, which is a plastic softener and that was derived from the base of course of food technology. But it is not going into foods; it is going into toys and other plastic materials. Therefore our products are already being used outside the food industry and of course we are trying to capitalize as much as we can on the knowledge we have. You could say flavor and fragrance. You could say emulsifiers. You can say gum, which you know came from Rodia. It is also in the food industry but it is also being used in industrials. Of course we are trying to capitalize a lot on that. So if you then looked on Genencor you could say that here is a strong position on the industrial side and we are really looking to also build a very strong position on the food and the feed side. Page 13 of 16 DANISCO CONFERENCE CALL JANUARY 27, 2005 Participant No. 4: AND JUST REGARDING THE FINANCING; WHAT ARE THE REMAINING SAY FINANCIAL MEANS IF YOU WERE TO MAKE ANY OTHER ACQUISITION IN THE SHORT-TERM? Alf Duch-Pedersen: I do not think we have given a very specific number here but Soren is looking at a comment. Soren Bjerre-Nielsen: If you look at our last quarterly statement you would see that our debt before this transaction was 9.2 billion DKK. We will build up additional debt during this quarter because of our sugar payments, as you are aware. We will be adding approximately 3.5 billion DKK to our debt so there will be limitations as to how far we can go given that our book equity will be around 12 billion DKK and our covenants are also based on the equity level. But there would still be room to do something but there will be limits on this. We have to find another way of financing further growth. Participant No. 4: DOES THE FACT THAT YOU ARE BUYING BACK SHARES AGAIN MEAN THAT YOU DO NOT HAVE ANY INTEREST OR YOU DO NOT HAVE ANY NEGOTIATIONS GOING ON AT THE MOMENT? Alf Duch-Pedersen: [Participant No. 4], you should see that in connection with our half-year statement those 300 million, which we will be buying back shares from actual business that we promised to buy back from the last financial year. You cannot see those in connection. That was actually so to speak we owe the market. We are now no longer insiders. Participant No. 4: Thank you very much. Alf Duch-Pedersen: You are welcome. Thank you very much for the many questions. Let me finish by saying that by doing this we will have built the strongest technology platform in our industry already with high margins and high growth, which can be taken even further as you look forward. So there are many, many possibilities and we very much look forward to see if would could not finalize this and get together with the very good people of Genencor. But thank you for the questions and thank you for listening in. If you have further questions for us you are always welcome to phone but goodbye for now. Page 14 of 16 ABOUT THE TENDER OFFER Danisco expects to commence the tender offer as soon as practicable. Once the tender offer is commenced, offering materials will be mailed to Genencor shareholders and Danisco will file all necessary information with the United States Securities and Exchange Commission. Genencor shareholders and other interested parties are urged to read Danisco's tender offer statement and other relevant documents filed with the SEC when they become available because they will contain important information. Genencor shareholders will be able to receive such documents free of charge at the SEC's web site, www.sec.gov, or upon request to Danisco Investor Relations by telephone at +45 3266 2912 or by e-mail at investor@danisco.com. *PLEASE NOTE: PROPER NAMES/ORGANIZATIONS SPELLING NOT VERIFIED. Page 15 of 16