The deal between DuPont and International Flavors & Fragrances (IFF) will create a new consumer goods giant. According to the information, on Sunday, it was announced that Dupont would merge its food and nutrition business with International Flavors & Fragrances. This new will influence the U.S. economy.
It is important to mention that DuPont came to existence after giant DowDuPont transformed into three separate companies. The first one is called Dow Inc. and its primary sphere of interest relates to material sciences.
The second company, now dubbed Corteva, is working in agriculture. The third one is the DuPont with its food and nutrition business. However, it has business interests in electronics, transportation, and construction.
International Flavors & Fragrances develops flavors and fragrances for consumer goods. Based on the information, the company has 33,000 customers all over the world. Also, it has hundreds of manufacturing and research facilities located in different countries.
As a result of this deal, DuPont will create a $45.4 billion consumer goods giant by merging its food business with IFF. The agreement announced on December 15, values the DuPont unit at $26.2 billion. Also, DuPont shareholders will retain a majority stake in the entity. The annual revenue of the combined company will reach more than $11 billion.
On Sunday, Dupont and IFF made a joint statement. According to this statement, thanks to this deal, they expect that the company will reduce the cost by around $300 million. This will happen within three years of closing the deal. Moreover, a new company will have the opportunity to become the market leader when it comes to soy proteins, probiotics, and enzymes.
Healthy food and DuPont
The demand for healthier and more natural flavors is increasing all over the world. This trend was one of the primary reasons why the companies decided to merge.
Based on the data provided by research firm Reports and Data natural flavors are dominating the industry. In 2018, natural flavors accounted for more than 50% in the market.
International Flavors & Fragrances was not the only interested company, as Irish food giant Kerry Group was also interested in this deal. As of last week, Kerry Group was also interested in acquiring Dupont’s nutrition division. The official position of the Irish food giant remains unknown as it did not release the official statement.
However, DuPont made a decision to choose New York-based IFF as its strategic partner. The executive chairman of DuPont stated that his company conducted a very serious process. The purpose of this process was to select the best partner. The firm decided to pick IFF. Ed Breen also mentioned that the nutrition unit is ready for its next stage of growth.
Dupont and IFF want to close the deal by early 2021. However, this agreement is subject to approval by regulators as well as IFF shareholders. The current CEO of IFF will retain his post. It means that he will serve as chairman and chief executive. As a result, this deal new company will become one of the leaders in this industry.