International Flavors & Fragrances Inc. said it has entered into a definitive agreement to buy U.K.-based Frutarom Industries Ltd., in a cash and stock deal valued at around $7.1 billion.
New-York-headquartered IFF IFF, +1.48% , which produces flavors, fragrances and active ingredients in cosmetics, said the deal will help it create a global leader in taste, scent and nutrition. Israeli-based Frutarom FRUT, +0.00% is a flavors, savory solutions and natural ingredients company.
“By combining our deep R&D expertise with Frutarom’s, we are offering our customers a broader range of solutions and accelerating our growth strategy. We believe this combination will lead to faster and more profitable growth, enhanced free cash flow and generate greater returns for our shareholders,” said IFF Chairman and CEO, Andreas Fibig, in a press release.
Under terms of the deal, which has been unanimously approved by both companies, Frutarom FRUT, +0.00% shareholders will receive $71.19 in cash for each share and 0.249 of a share of IFF common stock. Based on the 10-day volume weighted average price for IFF shares for the period ending May 4, 2018, represents a total value of $106.25 a share.
Frutarom shareholders will also receive a special dividend, on a per share basis, equal to 0.249 of the per share value of IFF dividends.
On a pro forma basis, the combined company would expected to have around $5.3 billion of revenue in 2018. The transaction is expected to be neutral to IFF’s adjusted cash earnings per share in the first full year and double-digit accretive to adjusted cash earnings per share in the second full year.
IFF and Frutarom expect to realize around $145 million of run-rate cost synergies by the third full year after closing, with approximately 25% achieved in the first full year. ...