Danisco has today announced that it has agreed to merge its Flexible Packaging Division with the European flexible packaging activities of Amcor Ltd. (Amcor) and of AB Åkerlund & Rausing, part of A. Ahlstrom Corporation (Ahlstrom). The Joint Venture, which is subject to the approval of the European Union and other required regulatory approvals, will create the largest producer of flexible packaging in Europe, with estimated sales of EUR 1,100 million (DKK 8,000 million). The strategy is to derive substantial synergy benefits, particularly in the areas of greater plant focus, improved raw material purchasing, re-structured corporate and sales organisations and increased leverage from R&D spending.

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As part of the Joint Venture, Danisco will receive an initial cash payment of up to EUR 242 million (DKK 1,800 million) from Amcor, an earn-out of up to approx. EUR 100 million (DKK 750 million) linked to the future profitability of the Joint Venture, and 25 per cent of the share capital of the Joint Venture with initial value of EUR 61 million (DKK 450 million). Amcor will own 67 per cent of the Joint Venture and Ahlstrom 8 per cent. Through its continuing equity participation in the Joint Venture, Danisco will share in the substantial earnings potential of the Joint Venture. Danisco and Amcor have entered into put and call arrangements under which Danisco may sell its interest in the Joint Venture and Amcor may purchase Danisco´s interest in years 2 through 4 after the formation of the Joint Venture, based on a multiple of 6 times the Joint Venture´s earnings before interest, tax, depreciation and amortisation.

In the 12 months to end of January 2001, Danisco Flexible reported earnings (EBITA) of EUR 8 million (DKK 60 million) and sales of EUR 595 million (DKK 4,400 million). The book value of Danisco Flexible is approx. EUR 415 million (DKK 3,100 million). Applying a conservative approach, Danisco expects to write down the book value of Danisco Flexible in the range of DKK 700 – 1,000 million at year-end.

CEO of Danisco A/S, Alf Duch-Pedersen comments:

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“We´re pleased with the solution achieved. This is in line with the decision announced at our annual general meeting 2000 and our business strategy. It´s an optimum solution, creating a powerful market leader in the flexible packaging market in Europe. Amcor is a global leader in packaging and Åkerlund & Rausing is a focused producer, which provides Danisco Flexible with an attractive platform for further development. By retaining ownership in this new market leader, we get the opportunity to capitalise on the consolidation of the European market for flexible packaging.”

Amcor is a listed company domiciled in Australia. In the 1999/2000 financial year, the company reported sales of EUR 3,600 million (DKK 26,800 million) and has operations in more than 24 countries. Amcor employs around 18,000 people. The company produces a series of plastic, fibre and metal-based packaging products. Further information on Amcor is available at www.amcor.com

Åkerlund & Rausing is a Swedish-based company focusing on flexible packaging. The company is a wholly owned subsidiary of Ahlstrom based in Finland. The company reported sales of EUR 250 million (DKK 1,870 million) in 1999. Further information about Ahlstrom is available at www.ahlstrom.fi

Danisco – One Company – Many solutions
Danisco has made a successful change from being a traditional conglomerate to a knowledge-based ingredients company. The agreement on Danisco Flexible is a major step under the refocusing strategy of transforming Danisco into the world´s leading developer and producer of food ingredients. This position will be further strengthened through acquisitions and focus on organic growth by increased R&D efforts. Danisco (www.danisco.com) generates a strong cash flow through its global food ingredient operations and efficient sugar production.

Danisco to purchase own shares
Danisco shares have their main listing at the Copenhagen Stock Exchange and are also listed at the HEX Helsinki Stock Exchanges. Danisco intends to purchase own shares at the Copenhagen Stock Exchange. The shares will be repurchased within the authorisation given by the annual general meeting to the Board of Directors on 7 September 2000 (10 per cent of share capital). The shares are to be used for further development of the capital structure of the company, to finance or execute acquisitions, to be transferred in other ways, or to be cancelled.

The company intends to seek renewal of the authorisation at the annual general meeting in September 2001.

Danisco presently holds 852,000 Danisco shares (1.5 per cent) as hedging of the existing share option programme for senior management.