IFF to merge with DuPont nutrition business to create $45bn ingredients business

LONDON (ICIS)–International Flavors & Fragrances is to merge with DuPont’s nutrition and biosciences operations in a deal valuing the combined businesses at $45.4bn, the US-based companies said late on Sunday.

The agreement values the DuPont unit at $26.2bn based on IFF’s share price as of 13 December. Following close of the deal, which has been unanimously approved by the boards of both companies, DuPont stockholders will own 55.4% of the new companies and IFF shareholders will own 44.6%.

Upon completion of the deal, IFF will pay DuPont a $7.3bn special cash payment, the companies added. IFF CEO Andreas Fibig will serve as head of the merged company, while DuPont chief executive Ed Breen will become lead independent director.

“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,” Fibig said.

The merged company had estimated 2019 pro-forma revenues of $11bn and earnings before interest, taxes, depreciation and amortisation (EBITDA) of $2.6bn excluding synergies.

IFF’s operations in revenue terms are 57% derived from the taste sector, 37% from scents and 6% from nutrition and ingredients, while DuPont’s nutrition and biosciences operations derived 57% of sales from the food and beverage sector, 37% from health and biosciences and 6% from pharma.

“We conducted a very thorough process leading us to the selection of IFF as the preferred strategic partner for N&B [nutrition and biosciences],” said Breen.

The two businesses have a total of around 23,000 employees, 190 manufacturing sites and 130 technology and research centres.

IFF expects to realise cost synergies of $300m/year by the third year of the deal closing, driven by procurement, reduced overhead and increased manufacturing efficiencies. A longer-term target is to deliver $400m in run-rate synergies by capitalising on cross-selling opportunities, which would add $175m in annual EBITDA.

Greenhill and Morgan Stanley served as IFF’s financial advisors while Cleary Gottlieb Steen & Hamilton provided legal advice. Credit Suiss and Evercore provided financial counsel to DuPont, while Skadden, Arps, Slate, Meagher & Flom offered legal services.

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