Fragrance and flavors supplier International Flavors & Fragrances Inc. is to merge with DuPont’s Nutrition and Biosciences business in a deal valuing the combined entity at $45.4 billion.
The agreement, which was announced jointly on Sunday, values the DuPont business at $26.2 billion. DuPont shareholders are to hold a majority stake in the new entity, which will have combined revenues of more than $11 billion per year.
The merger will be made through a Reverse Morris Trust transaction. It is expected to create a behemoth in the ingredients market worldwide and generate cost savings of about $300 million three years after the closing takes place.
The new group will involve the food and beverage, cosmetics and personal care, and health and wellness categories.
“The combination of IFF and N&B is a pivotal moment in our journey to lead our industry as an invaluable innovation and creative partner for our customers,” IFF chairman and chief executive officer Andreas Fibig said in a statement. “Together, we will create a leading ingredients and solutions provider with a broader set of capabilities to meet our customers’ evolving needs.
“With highly complementary portfolios, we will have global scale and leading positions in key growth categories to capitalize on positive market trends, drive strong profitable growth for our shareholders and create opportunities for our employees,” he added.
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IFF and DuPont’s agreement has been unanimously approved by both companies’ boards. The deal is expected to close by the end of the first quarter of 2021. Then, DuPont shareholders are to own 55.4 percent the shares of the new company, and IFF shareholders, 44.6 percent.
Fibig is to be chairman and ceo, and Ed Breen, executive chairman of DuPont, will become the lead independent director of the new group. Directors from IFF and DuPont will make up its board.
The companies’ combined pro forma 2019 revenue is more than $11 billion, and earnings before interest, taxes, depreciation and amortization comes to $2.6 billion, excluding synergies.
Once the transaction is finalized, DuPont will receive a onetime $7.3 billion special cash payment, subject to certain adjustments.
IFF, among the world’s largest fragrance and flavors suppliers, in the third quarter posted a 40 percent uptick in net sales, mostly due to the company’s acquisition of Frutarum. Net sales were almost $1.3 billion, up from $908 million in the same prior-year period. Net income rose 36 percent, to $129.8 million, versus $95.7 million.