Updated: DuPont, IFF to merge nutrition businesses in $26 billion stock deal

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IFF announced it entered into a definitive agreement for the merger of IFF and DuPont’s Nutrition & Biosciences business in what is known as Reverse Morris Trust transaction. DuPont shareholders will hold a majority stake in the combined company in the stock deal valued at $26 billion.

IFF reportedly edged out Ireland -based Kerry Group, which was also pursuing a merger, according to published reports. DuPont Executive Chairman Ed Breen had been pushing for a merger or spinoff of the nutrition unit as a way to boost DuPont’s shareholder value.

DuPont Nutrition & Biosciences has 650 employees in Delaware.

“For the time being, it remains business as usual until the close of the transaction, which is expected to occur in Q1, 2021,” DuPont spokesman Dan Turner stated. “DuPont Nutrition & Biosciences and IFF will continue to operate as independent entities. Over the long term, we believe the combined company will create growth opportunities and shareholder value.”

U.S. Sen Tom Carper issued the following statement regarding the merger and its impact on DuPont, which is based outside Wilmington.

“As we learn more about how this DuPont deal will affect the company’s presence and employees in Delaware, I am hopeful that the work our Governor and Congressional Delegation have done to encourage DuPont to keep its businesses in the First State will continue to resonate. There is potential here as DuPont develops its plan to invest the $7 billion cash payout into its company, and I remain cautiously optimistic that this will bring good things to the company and its presence in Delaware. The Delegation and the Governor will continue to stay in close contact with the company to insure its growth in the First State.”

Under the terms of the agreement, which has been unanimously approved by both boards of directors, DuPont shareholders will own 55.4 percent of the shares of the new company and existing IFF shareholders will own 44.6 percent. Upon completion of the transaction, DuPont will receive a one-time $7.3 billion special cash payment, subject to certain adjustments

The combination of IFF (International Food and Fragrances) and the DuPont unit creates a global leader in food and beverage, home & personal care and health & wellness markets, with an estimated 2019 pro forma revenue of more than $11 billion. That’s more thandouble the current revenues of IFF, a release stated.

“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. I am pleased to join the board of the combined organization and remain involved in unlocking the potential of this new company,” said Breen, executive chairman of DuPont. “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.”

Upon closing, the new company’s Board of Directors will consist of 13 directors: 7 current IFF directors and 6 DuPont director appointees until the Annual Meeting in 2022, when there will be 6 directors from each company. Andreas Fibig will continue to be the chairman of the board and an IFF appointee, he will also continue as Chief Executive Officer. The company will be headquartered in New York. DuPont Executive Chairman, Ed Breen, will join the board of the combined company as a DuPont appointee and will serve as Lead Independent Director starting June 1, 2021.

The combined company’s target is to deliver more than $400 million in revenue synergies (cost cuts and consolidation) which would result in more than $175 million of EBITDA (earnings before interest before taxes, interest, depreciation, and amortization. Earnings would also be driven by cross-selling opportunities and leveraging the expanded capabilities across a broader customer base, a release stated.

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