Good afternoon,
IFF and DuPont now have the green light to combine DuPont’s Nutrition & Biosciences business with the company formerly known as International Food and Fragrances.
The final hurdle to the deal came this week when the European Commission gave its blessing. That should allow the transaction to close in the first quarter of next year.
“Both of our teams can be proud of the progress we have made during this challenging year,” stated Ed Breen, DuPont CEO. “I am confident that, together, the combined company will be well-positioned for long-term sustainable growth.”
The deal is another example of the complex financial engineering taking place at DuPont under Breen. It started with the Dow-DuPont merger and a spin-off into three companies, Dow, DuPont, and the combined Dow-DuPont AgroSciences operation known as Corteva.
The ingredients business had been a major focus of former DuPont CEO Ellen Kullman, who doggedly pursued and eventually acquired Danisco’s, a Danish ingredients company.
As described in a DuPont release from last year, the latest transaction involves something known as a Reverse Morris Trust, a mechanism that allows shareholders to avoid getting socked with taxes.
DuPont will own 54 percent shares of the IFF and receive a $7.3 billion payment when the deal is completed.
The new IFF will have annual revenues of more than $11 billion, or about half of DuPont’s total sales.
Both IFF and DuPont’s ingredients side have been working on “synergies,” a nice word for cost-cutting.
Breen, who returned to the corner office at DuPont after earnings misses, is working to convince Wall Street that the slicing and dicing add value.
So far, it appears that DuPont, while a more focused and efficient company, has not seen those improvements show up in its stock price.
The pandemic has not helped, and the strong stock market has bypassed many legacy companies:- Doug Rainey, chief content officer.
