International Flavors & Fragrances Inc plans to merge with Dupont Inc’s nutrition and biosciences unit worth $26.2 billion in a merger deal. This measure was done to create a new consumer giant worth at least $45 billion.
Under the terms of agreement, IFF shareholders will own 44.6% of the new company’s shares while DuPont shareholders will own 55.4%, according to the statement released by the IFF. The IFF also stated that there was a unanimous agreement of the boards of the two companies regarding the deal.
Dupont is also set to receive $7.3 billion as a one-time cash payment once the deal was closed.
IFF Chief Executive Officer Andreas Fibig will run the merger but will remain chairman of the board.
Before the merger with IFF, Bloomberg reported that DuPont was also in talks with Ireland’s Kerry Group for a deal on its nutrition unit.
“We conducted a very thorough process leading us to the selection of IFF as the preferred strategic partner for N&B,” said DuPont Executive Chairman Ed Breen.
IFF works with global brands in developing scents and tastes for a number of household names.
“Together, we will create a leading ingredients and solutions provider with a broader set of capabilities to meet our customer’s evolving needs,” Fibig of IFF said.
The merger will be conducted with Reverse Morris Trust, a tax-efficient structure. This kind of transaction allows a company to avoid a big tax bill by spinning off a unit to be divested and simultaneously merged with another company.
When the deal closes, IFF anticipates a cost savings of $300 million at the end of the third year, based on run-rate.
The two companies have received fully-committed debt financing from Morgan Stanley and Credit Suisse.
Morgan Stanley and Greenhill & Co advised IFF on the merger, while Evercore and Credit Suisse Securities (USA) served as advisers to DuPont.