International Flavors & Fragrances Inc. (IFF) is on track to close the Frutarom merger this year — earlier than expected.
IFF, a supplier to the beauty and food industries, went through the details of the $7.1 billion Frutarom merger on its second-quarter earnings call Wednesday. The business plans to receive $3.1 billion in debt financing for the deal, executives said.
IFF’s chairman and chief executive officer Andreas Fibig stressed the companies’ complimentary capabilities on the call with Wall Street. IFF is planning to sell some of Frutarom’s offerings to its existing customers, for example, and Frutarom gives the business more access to small and mid-sized customers, which are growing faster than large ones, he noted.
“The categories we have now as a portfolio, as a combined company — or that we will have after closing — [give] us the ability to move categories that have good and high growth rates, like natural colors, for example,” Fibig said.
IFF’s merger with Frutarom is expected to be completed in the fourth quarter.
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“Together with Frutarom, IFF expects to deliver accelerated growth and offer our customers a stronger, more differentiated portfolio of integrated solutions, allowing us to expand beyond our core taste and scent businesses into nutrition,” said Fibig in a statement. “We continue to focus on driving differentiation via research and development, balancing our customer base by emphasizing fast-growing small and mid-sized customers and maximizing our portfolio by expanding into fast-growing and diverse adjacencies.”
For the second quarter, IFF posted a net sales gain of 5 percent, to $920 million in sales for the second quarter, with $99.1 million in net income, a 10 percent drop. The fragrance business brought in $469.5 million in sales, up 5 percent in the quarter. Growth was driven by Latin America and North America. Consumer fragrances were up 5 percent, driven by double-digit growth in hair care, as well as increases in toiletries, home care and fabric care. The ingredient side of the business was up 10 percent.
IFF’s net income for the quarter was $129.4, and earnings per share were $1.63. Earnings numbers were down slightly, affected by currency, the company said.
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