December 16, 2019

By Lynda Kiernan

A deal struck between International Flavors & Fragrances (IFF) and DuPont will merge DuPont’s Nutrition and Biosciences (N&B) business with IFF through a deal that values DuPont’s N&B business at $26.2 billion.

The agreement brings together two companies that have combined estimated revenues of $11 billion for 2019, and creates a global giant with a value exceeding $45 billion.

Under the agreed-upon terms, DuPont shareholders will own 55.4 percent of the shares of the new company, and existing IFF shareholders will hold the remaining 44.6 percent stake, and upon completion of the deal, which is expected to occur in the first quarter of 2021, DuPont will receive a one-time special cash payment of $7.3 billion.

“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. Together, we will create a leading ingredients and solutions provider with a broader set of capabilities to meet our customers’ evolving needs,” said IFF chairman and CEO Andreas Fibig.

As consumers continue to demand shorter, more transparent ingredients lists, including more natural, healthier, and plant-based ingredients, the reliance of food manufacturers on companies such as IFF and N&B also increases. The resulting company will have a mega-presence on the global flavors and ingredients market, taking a lead position in key taste, texture, scent, nutrition, enzymes, cultures, soy proteins, and probiotics categories.

“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,” said Fibig. “I have been impressed by N&B’s management team, which shares our culture and values, and we look forward to welcoming them to the IFF family.”

The global flavors segment has seen its fair share of consolidation and dynamic activity within the past few years, and one of the most active players has been IFF, executing approximately 30 acquisitions since 2011. 

Last year the company closed its largest, when it spent $7.1 billion to acquire Israel-based global flavors giant Frutarom Industries, only two years after acquiring Philadelphia-based flavors company, David Michael & Co., for an undisclosed amount.

Moves such as these, and the merger with DuPont’s N&B business, place IFF in the pole position within the global food and beverage flavors market that was worth $12 4 billion in 2016, and, at a CAGR of 5.5 percent, is expected to reach a value of $18.1 billion by 2023, according to Allied Market Research. 

“DuPont and IFF share long and successful histories of customer-driven innovation and cultures of excellence, which is why I am confident that N&B will be well-positioned for its next phase of growth,” said Ed Breen, executive chairman, DuPont, who will be joining the board of the combined company.

“We conducted a very thorough process leading us to the selection of IFF as the preferred strategic partner for N&B. I am excited about the future of the new company and all the opportunities it has for long-term value creation.”

Not only will the new combined business hold the number one, or two position in many key categories, but this deal is expected to create a business that can significantly increase customer speed to market, and one that can create new efficiencies in product development, while also providing critical consumer insights for next-generation products.

“My team and I are excited about the opportunity to build the new company and create a new world-class leader,” said Matthias Heinzel, president, N&B.

“Our expertise together with IFF will best position us to address customer needs and ultimately redefine our industry. IFF’s innovation and customer-centric culture is remarkably similar to ours and we look forward to working with them for a smooth integration of our two organizations.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.