DuPont, IFF get final regulatory nod to create $45 billion industry giant

By Hank Schultz

- Last updated on GMT

©Getty Images - metamorworks
©Getty Images - metamorworks

Related tags financial report Mergers and acquisitions

DuPont and IFF have received final regulatory approval from the European Commission for a merger that will create an industry giant valued at more than $45 billion.

IFF (International Flavors and Fragrances), based in New York but whose stock trades on the Paris exchange, and DuPont’s Nutrition & Biosciences unit, whose headquarters is in Wilmington, DE, first announced the deal a year ago. Since then the deal has gone through anti trust review by the US Justice Department and now has received unconditional clearance in the EU.

“We are pleased to have received our final antitrust clearance from the European Union (EU), allowing us to proceed with our combination with DuPont N&B,”​ said IFF Chairman and CEO, Andreas Fibig. “Today marks another great milestone that brings us one step closer to bringing this industry-leading combination to life.”

“I am confident that, together, the combined company will be well-positioned for long-term sustainable growth,” ​said DuPont CEO Ed Breen.

With a combined estimated 2019 revenue of more than $11 billion and EBITDA of $2.6 billion, the companies have said the ‘complementary’ portfolios of the two businesses will give the new company leadership positions across multiple key markets including nutrition, probiotics, enzymes, taste, texture, scent, cultures, and soy proteins. 

Deal set to close in Q1 2021

The deal will see the companies combine, with existing DuPont shareholders gaining a 55.4% stake of the new company and existing IFF shareholders gaining a 44.6% stake, according to a statement by IFF. Upon completion of the transaction, DuPont will receive a one-time $7.3 billion special cash payment, subject to certain adjustments, noted a press release. With the final regulatory approval in hand the deal is now expected to close in the first quarter of 2021.

According to Mark Astrachan, analyst at Stifel, the merger makes ‘strategic sense’ to IFF, by allowing it to offer “a more complete product suite to a broader customer base.” 

IFF  has said the merger will be executed using a tax-efficient structure called a Reverse Morris Trust, IFF added. 

Such transactions allow a company to avoid a big tax bill by spinning off a unit that it wants to divest and simultaneously merging it with another company. 

After the deal closes, IFF said it expects cost savings of about $300 million by the end of third year.

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