On Sunday, International Flavours & Fragrances Inc (IFF) told the public of its planned merger with the nutrition and biosciences unit of DuPont Inc. DuPont’s merging unit is valued at $26.2 billion, but the new company after the merger will be valued over $45 billion.
Unanimous Approval
As per the agreement’s terms, shareholders of DuPont will own 55.4% of the new company’s shares, while IIF’s shareholders will own the remaining 44.6%. This information was given via a statement that was done by the IFF about the matter. The New York-based company further stated that the deal received unanimous approval from both boards of shareholders.
Furthermore, Dupont, an industrial materials manufacturer, will receive a one-time payment of $7.3 billion when the deal reaches closure. Andreas Fibig, IFF’s current Chief Executive Officer (CEO), will head the combined company and serve as chairman of the board.
A New Giant
Fibig stated that the merger would lead to a company that would serve as one of the most significant ingredients and solution providers of the world. Fibig says that the company will be capable of a broader set of services that will cater to the evolving needs of its customers.
Ed Breen, the Executive Chairman of DuPont, stated that his company was comprehensive in the selection process. This process led to DuPont concluding that IFF would be the most strategic partner for DuPont’s N&B Unit.
IFF, as its name would suggest, creates various fragrances and flavors. The company works alongside global brands in the development of multiple tastes and scents for products already considered household names.
Reverse Morris Trust Structure
The merger will be done via a structure called Reverse Morris Trust, according to the IFF. This method is more tax-efficient than other structures, helping a company dodge a large tax bill by spinning off the unit the company wants to divest. While doing this, the spun-off company merges with another.
Through the merger, IFF is anticipating cost savings of around $300 million, based on run-rate, by the third year’s end. The two companies have also revealed that they have received a fully committed debt financing service from both Credit Suisse and Morgan Stanley. Greenhill & Co and Evercore will serve as advisors for IFF and DuPont, respectively.
Winder Investments, IFF’s largest shareholder, has also agreed to the event, voting in favor of the deal.
The Kerry Group, an Ireland-based company, was in the process of negotiating for the unit but seemed to have fallen on the wayside.
