IFF-DuPont deal creates $45bn flavourings giant
International Flavors & Fragrances agreed on Sunday to buy DuPont’s nutrition and biosciences business for $26.2bn, the latest acquisition by the New York company as it seeks to become a major supplier to the consumer goods industry.
The deal will create a giant in the flavourings and nutrients industry, providing ingredients for products from luxury perfumes to laundry detergent to vegan burgers.
The combined company will have an enterprise value, which includes debt, of $45.4bn, with annual revenues of about $11bn.
IFF beat Ireland’s Kerry Group in the auction of the DuPont unit, which will be spun off and merged using a Reverse Morris Trust structure that means DuPont’s shareholders will not have to pay tax on the deal.
Under the terms of the agreement, DuPont shareholders will own 55.4 per cent of the new combined company, while existing IFF shareholders will own the remainder. The company will be run by Andreas Fibig, IFF chief executive.
If the transaction is approved, DuPont shareholders will also share in a $7.3bn special cash payment.
The latest deal comes a year after IFF agreed to acquire Israeli flavour maker Frutarom Industries for $7.1bn including debt, part of its plan to consolidate the food flavouring sector.
The industry is dominated by four major companies — Givaudan, Firmenich, IFF and Symrise — which provide flavours and fragrances for use in food, beverages and pharmaceuticals.
Sales have enjoyed steady growth in recent years as big consumer goods companies scramble to meet rising demand for natural, rather than artificial, scents and flavourings.
“With highly complementary portfolios, we will have global scale and leading positions in key growth categories to capitalise on positive market trends, drive strong profitable growth for our shareholders and create opportunities for our employees,” Mr Fibig said.
Ed Breen, chairman of DuPont, will become the lead independent director on a 13-person board, of which seven will be appointed by IFF and six by DuPont.
Greenhill and Morgan Stanley were the financial advisers to IFF, while Cleary Gottlieb Steen & Hamilton gave it legal counsel. Credit Suisse and Evercore were advisers to DuPont and Skadden Arps gave it legal advice.