IFF will merge with DuPont’s Nutrition & Biosciences (N&B) business—where will this 130-year-old flavor and fragrance giant head next?

Author: Cici (Yvonne) On December 15, International Flavors & Fragrances Inc. (IFF) announced its merger with DuPont’s Nutrition & Biosciences (hereinafter referred to as N&B) business. The newly formed company will become a consumer-goods giant valued at $45.4 billion. IFF ranks among the world’s top 10 flavor and fragrance companies, holding a 12.92% share of the global market. DuPont’s N&B business covers sweeteners and emulsifiers for dairy and dietary fiber products, as well as plant-based proteins, probiotics, and related fields. In its announcement, IFF stated: “The combination of IFF and DuPont’s N&B business is dedicated to delivering high-value ingredients and solutions to the global food & beverage, home & personal care, and health & wellness markets.” The merged entity “will lead the consumer industry toward healthier, ‘Better for You’ offerings.” According to Bloomberg, this $26.2 billion acquisition of DuPont’s N&B business marks IFF’s largest transaction to date. What new capabilities will IFF gain through this merger? And where will this flavor-and-fragrance titan sail next? FBIF will explore these questions in depth. 01. IFF Secures DuPont’s N&B Business for $26.2 Billion In the bidding process for DuPont’s N&B business, IFF secured a $26.2 billion agreement, outcompeting Kerry Group, an Irish food-ingredients supplier. The combined company will have a market capitalization of $45.4 billion (approximately RMB 316.9 billion), supplying high-value ingredients and solutions to food & beverage, home & personal care, and health & wellness markets. It is projected to generate $11 billion in revenue in 2019 and aims to realize approximately $300 million in cost savings within three years. Under the agreement, DuPont shareholders will hold 55.4% of the new company’s equity, while existing IFF shareholders will retain 44.6%. The transaction still requires approval from IFF shareholders (which has already been secured from its largest shareholder, Winder Investment Pte Ltd.). Upon completion, DuPont will receive a one-time cash payment of $7.3 billion. Andreas Fibig, IFF’s CEO, will serve as Chairman and CEO of the new company. He stated: “The combination of IFF and N&B is pivotal to our becoming a trusted innovation partner for our customers. Together, we will build a leading provider of ingredients and solutions, offering a broader functional portfolio to meet our customers’ evolving needs.” IFF’s portfolio is divided into three segments: 1. Taste (57%): delivering flavor compounds and natural taste solutions for food and beverages; 2. Scent (37%): providing natural or synthetic fragrance compounds, ingredients, and cosmetic actives for home & personal care products; 3. Nutrition & Ingredients (6%): offering natural products and solutions—including natural health ingredients, natural food preservatives, natural colors, and flavor components. DuPont’s N&B portfolio is likewise divided into three segments: 1. Food & Beverage (57%): supplying natural, plant-based specialty food ingredients—including functional ingredients, proteins, emulsifiers, and sweeteners; 2. Health & Biosciences (37%): delivering sustainable, clean-label, high-performance solutions—including probiotics, human milk oligosaccharides (HMOs), fibers, probiotics, and enzymes for home & personal care; 3. Pharmaceutical Solutions (6%): providing globally leading functional cellulose polymers, algae-derived pharmaceutical excipients, and dietary supplement ingredients.

Practical Guide to Cross-Border M&A by Listed Companies

Using Stock for M&A—The Most Important Capital Tool After Listing Conclusion First: A Listed Company’s Most Powerful Capital Weapon Is Its Stock Many entrepreneurs considering listing focus primarily on how much capital they can raise. In reality, however, the most powerful capital tool available to listed companies is not fundraising—it is the ability to conduct mergers and acquisitions using stock. Listed companies can use their shares as consideration to acquire other businesses without expending cash. This means: theoretically, as long as its stock price remains sufficiently high, a listed company can expand indefinitely. Nearly all of the world’s mega-corporate empires—including Google, Amazon, Tencent, and Alibaba—have built their dominance through stock-based M&A—not through cash accumulation. For Chinese enterprises, completing a Nasdaq listing and mastering this capital tool marks the true starting point for entering the global capital arena. This article was compiled by the Tongding Capital Group team. Tongding Capital Group is headquartered in Shanghai, with a subsidiary in Shenzhen and operational networks spanning Hong Kong and Singapore. Led by Qijie Liao—formerly a top-tier Canadian brokerage trader—the firm has successfully guided nine enterprises through Nasdaq listings; several additional projects are currently undergoing guidance. I. Why M&A Capability Increases Dramatically After Listing Listed companies possess a currency unavailable to private firms: publicly traded stock. Advantages of Stock as M&A Currency • No Cash Outlay Required: Exchanging stock for stock enables the acquirer to obtain the target’s business and assets without spending any cash. • Amplified Acquisition Multiples: If the acquirer trades at a 20x P/E ratio while the target trades at only 10x P/E, then $1 of the acquirer’s stock (representing $20 worth of earnings power) can acquire $1 of the target’s value (representing only $10 worth of earnings power)—effectively achieving asset appreciation via stock-value arbitrage. • Tax Deferral for Sellers: In the U.S., stock-for-stock reorganizations typically qualify for tax deferral, meaning sellers need not immediately pay capital gains tax—a feature that makes stock consideration significantly more attractive to target shareholders. Listed Companies’ M&A Credibility Listed companies undergo rigorous scrutiny by the SEC and PCAOB, ensuring transparent financial reporting. This grants them stronger credibility during M&A negotiations. When a private company sells equity to another private company, the buyer cannot independently verify the seller’s valuation—but a listed company’s stock price is publicly determined daily by the market, greatly reducing resistance from target shareholders accepting stock as consideration. II. Three Primary Forms of Cross-Border M&A Form 1: All-Stock Deal The acquirer issues entirely new shares as purchase consideration; target shareholders receive the acquirer’s stock and become new shareholders of the acquiring company. This method consumes the least cash and suits acquirers with limited cash reserves but high stock prices and large market capitalizations. Challenge of All-Stock Deals: Target shareholders bear the risk of the acquirer’s stock declining in value (their newly acquired shares may depreciate substantially during lock-up periods). Thus, all-stock deals demand high stability in the acquirer’s stock price. Form 2: Cash-and-Stock Deal Purchase consideration comprises both cash and stock, with flexible allocation ratios typically determined through negotiation. This is the most common M&A structure, balancing the target’s need for cash certainty against the acquirer’s desire to preserve cash reserves.

Nykredit A/S Purchases 2,025,881 Shares in International Flavors & Fragrances Inc.

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Nykredit A/S acquired a $160.5 million stake in International Flavors & Fragrances Inc., raising ownership to 0.79%. Despite recent earnings misses, analysts maintain a moderate buy rating alongside a $2.5 billion share buyback program.

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