International Flavors & Fragrances Inc. (IFF) has recently declared that it would merge with DuPont Inc’s nutrition & biosciences unit. It will create a new consumer unit that would be worth over 45 billion USD after the merger. As per the initial agreements, DuPont shareholders will be given rights to 55.4% shares, whereas IFF shareholders will get the minority 44.6% shares in the new company. IFF said in an official statement that the above deal has been accepted by the board of both the companies.
In addition to this, DuPont is likely to receive a one-time cash payment of $7.3 billion once the merger is done. It should be noted that Ireland’s Kerry Group was also in talks with DuPont for merging its nutrition unit.
IFF creates flavors and fragrances and it works with many major global names to develop scents and tastes for products.
DuPont Executive Chairman Ed Breen said, “We conducted a very thorough process leading us to the selection of IFF as the preferred strategic partner for N&B.”
IFF’s Fibig said, “Together, we will create a leading ingredients and solutions provider with a broader set of capabilities to meet our customers’ evolving needs.”
According to IFF, the merger will be done through a tax-efficient structure called a Reverse Morris Trust. This structure helps the company to avoid big tax burdens by spinning off a unit that the parent company aims to divest and merge it with another firm.
As per sources, once the deal is closed, IFF should save 300 million USD on the cost by the end of the third year. Both companies have confirmed that they have secured completely dedicated debt financing from Morgan Stanley and Credit Suisse. IFF has also confirmed that its biggest shareholder, Winder Investments, is likely to support this deal.