Taking a lead
Ed Breen and Andreas Fibig. Image: IFF
“This is not about scale. This is about first mover advantage to redefine our industry.” So says IFF CEO Andreas Fibig of the potential merger between IFF and DuPont’s nutrition and biosciences (N&B) business.
The merger could create a $45 billion powerhouse aiming to take a dominant position in food – across taste, texture, nutrition, enzymes, cultures, soy proteins and probiotics.
Maybe it’s not about scale. But it’s definitely about standing out – and the sums add up.
Ed Breen, executive chairman of DuPont, said the company conducted a very thorough process that led to the selection of IFF as the preferred strategic partner for N&B.
The merged business wants to be the leader in texturisers and flavours and, ultimately, combine categories to provide solutions for food manufacturers. This could increase the likelihood that a food maker turns to the new IFF for all of its business rather than shopping around for multiple suppliers.
The plant based burger is a perfect example of what IFF wants. IFF provides the natural colours and flavours and now (via DuPont) has the plant based protein and the texturisers, says Fibig.
What changes we’ll see from the merger depends on how IFF engages with its customers. However, it is expected that the bold move will have implications for the market.
An IFF-DuPont tie-up will double the R&D of any company in the industry, we’re told.
The firms said in a joint statement that they are projecting savings of about $300 million within three years of closing the deal.
Last year, IFF acquired Frutarom Industries for $7.1 billion. The deal allowed IFF to increase its reach into natural colours, enzymes, antioxidants and health ingredients, while giving it access to smaller and mid-sized customers — including private-label products, which comprises 70% of Frutarom’s sales.
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 US$7.3 billion special cash payment, subject to certain adjustments.