Creates New Global Integrated Solutions Leader
Serving Consumer-Oriented Food & Beverage, Home & Personal
Care and Health & Wellness End Markets
The Deal Values the Combined Company at $45.4
billion on an Enterprise Value Basis, Reflecting a Value of $26.2
billion for the N&B business with Combined Pro Forma 2019
Revenue of more than $11 billion and $2.6 billion of EBITDA
Creates Significant Shareholder Value through
Tax-Efficient Reverse Morris Trust Structure with Expected Cost
Synergies of ~$300 million and Revenue Synergies of About $400
million by End of Year Three Post Close
#1 or #2 Market Positions in High-Value
Ingredients Categories and Best-in-Class R&D Capabilities
Andreas Fibig to Serve as Chairman and CEO and
Ed Breen Will Become Lead Independent Director; Combined Company
Board to Consist of Directors from IFF and DuPont
IFF’s Largest Shareholder, at ~19% of Shares
Outstanding, Has Agreed to Vote in Favor of the Transaction
Committed to Maintaining Investment Grade
Balance Sheet and Expected to Delever Below 3.0x by Year Two Post
Transaction Closing, While Maintaining IFF’s Existing Dividend
Policy
Regulatory News:
IFF (NYSE: IFF) (Euronext Paris: IFF) (TASE: IFF) and DuPont
(NYSE: DD) today announced that they have entered into a definitive
agreement for the merger of IFF and DuPont’s Nutrition &
Biosciences (N&B) business in a Reverse Morris Trust
transaction. The deal values the combined company at $45.4 billion
on an enterprise value basis, reflecting a value of $26.2 billion
for the N&B business based on IFF’s share price as of December
13, 2019. Under the terms of the agreement, which has been
unanimously approved by both Boards of Directors, DuPont
shareholders will own 55.4% of the shares of the new company and
existing IFF shareholders will own 44.6%. Upon completion of the
transaction, DuPont will receive a one-time $7.3 billion special
cash payment, subject to certain adjustments.
The combination of IFF and N&B creates a global leader in
high-value ingredients and solutions for global Food &
Beverage, Home & Personal Care and Health & Wellness
markets, with estimated 2019 pro forma revenue of more than $11
billion and EBITDA of $2.6 billion, excluding synergies. The
complementary portfolios will give the company leadership positions
across key Taste, Texture, Scent, Nutrition, Enzymes, Cultures, Soy
Proteins and Probiotics categories. The combined company’s global
reach and enhanced set of capabilities will enable the creation of
innovative solutions to respond to customer demands and increasing
consumer preferences for natural, healthier, and “better for you”
products.
“The combination of IFF and N&B is a pivotal moment in our
journey to lead our industry as an invaluable innovation and
creative partner for our customers. Together, we will create a
leading ingredients and solutions provider with a broader set of
capabilities to meet our customers’ evolving needs,” said IFF
Chairman and CEO, Andreas Fibig. “With highly complementary
portfolios, we will have global scale and leading positions in key
growth categories to capitalize on positive market trends, drive
strong profitable growth for our shareholders and create
opportunities for our employees. I have been impressed by N&B’s
management team, which shares our culture and values, and we look
forward to welcoming them to the IFF family.”
“DuPont and IFF share long and successful histories of
customer-driven innovation and cultures of excellence, which is why
I am confident that N&B will be well-positioned for its next
phase of growth. I am pleased to join the Board of the combined
organization and remain involved in unlocking the potential of this
new company,” said Ed Breen, Executive Chairman of DuPont. “We
conducted a very thorough process leading us to the selection of
IFF as the preferred strategic partner for N&B. I am excited
about the future of the new company and all the opportunities it
has for long-term value creation.”
Strategic Rationale
The new company will be ideally equipped to deliver in-demand
differentiated solutions for more natural, healthy products to an
expanded customer base spanning both large multinationals and
fast-growing small and medium-sized customers.
- Best-in-Class Innovation Portfolio
Creates Differentiated Offering and Compelling Value
Proposition – The company will be an immediate leader in the
rapid consumer-driven industry evolution toward healthier, “better
for you” products. With leading R&D and applications
development capabilities and an expanded customer base, the
combined company is expected to significantly increase customer
speed to market, create new efficiencies in product development and
provide critical consumer insights for next-generation
products.
- Leading Positions Across High-Value Added
Ingredient Categories – The company will have #1 or #2
positions across attractive Taste, Texture, Scent, Nutrition,
Cultures, Enzymes, Soy Proteins and Probiotics categories.
- Highly Attractive Financial
Profile – Shareholders will benefit from a highly profitable
business with strong cash generation. The company expects to
generate attractive top-line growth and enhanced margins with
further benefit from cost synergies and revenue growth
opportunities. The combined company will maintain IFF’s current
dividend policy.
- Shared Culture and Vision, a Strategic
Asset to Execution – IFF and N&B are customer-focused
organizations with cultures that emphasize science and creativity.
The combined company will benefit from the best of both
organizations’ experienced leaders and talented teams. Our shared
commitment to sustainability, along with the combination of our
complementary capabilities, will allow us to positively shape the
evolution of the industry.
“My team and I are excited about the opportunity to build the
new company and create a new world-class leader. Our expertise
together with IFF will best position us to address customer needs
and ultimately redefine our industry,” said N&B President,
Matthias Heinzel. “IFF’s innovation and customer-centric culture is
remarkably similar to ours and we look forward to working with them
for a smooth integration of our two organizations.”
Governance and Management
Upon closing, the new company’s Board of Directors will consist
of 13 directors: 7 current IFF directors and 6 DuPont director
appointees until the Annual Meeting in 2022, when there will be 6
directors from each company. Andreas Fibig will continue to be the
Chairman of the Board and an IFF appointee, he will also continue
as Chief Executive Officer. The company will be headquartered in
New York. DuPont Executive Chairman, Ed Breen, will join the board
of the combined company as a DuPont appointee and will serve as
Lead Independent Director starting June 1, 2021.
The new company will draw upon the best talent from both
organizations. IFF and N&B will form an Integration Office
composed of leaders from both companies.
Financial Benefits
The combined company will have a strong financial profile,
including:
- Pro forma revenues of more than $11 billion based on fiscal
year 2019 estimated results
- Adjusted EBITDA margin of ~23% pre-synergies and ~26% with
run-rate cost synergies based on fiscal 2019 pro forma estimated
results
- Expected revenue growth rate in the mid-single digits over the
long-term
- Strong cash flow generation supporting an investment grade
credit profile
- Commitment to the continuation of IFF’s historical dividend
policy
IFF expects to realize cost synergies of approximately $300
million on a run-rate basis by the end of the third year
post-closing. These cost synergies will be driven by procurement
excellence, streamlining overhead and manufacturing efficiencies.
In addition, the combined company’s target is to deliver more than
$400 million in run-rate revenue synergies, which would result in
more than $175 million of EBITDA, driven by cross-selling
opportunities and leveraging the expanded capabilities across a
broader customer base.
IFF is committed to maintaining an investment grade rating and
plans to delever from approximately 4.0x at transaction close to
below 3.0x by year two following closing. Following the close of
the transaction, IFF expects that substantially all of the debt of
the combined company will be pari passu.
Guidance
IFF is affirming its existing 2019 full-year guidance. The
company reconfirms its full-year projections for sales to be
between $5.15 billion and $5.25 billion with adjusted EPS to be
between $4.85 and $5.05 and adjusted EPS excluding amortization to
be between $6.15 and $6.35.
DuPont reconfirms its expectations for total annual revenue of
approximately $21.5 billion and an adjusted EPS1 range of $3.77 to
$3.82. DuPont expects operating EBITDA to be at the low end of the
previously provided range, primarily driven by temporary supply
chain disruptions in Safety & Construction (S&C) and
Electronics & Imaging (E&I).
Transaction Details
The combination will be executed through a Reverse Morris Trust
transaction. Upon completion, DuPont shareholders will own 55.4% of
the combined company and IFF’s shareholders will own 44.6%. In
addition, at the time of completion, DuPont will receive a one-time
$7.3 billion cash payment, subject to adjustment. The transaction
is expected to be tax-free to DuPont and its shareholders for U.S.
federal income tax purposes.
Financing and Approvals
The transaction is subject to approval by IFF shareholders and
other customary closing conditions, including regulatory approvals.
As part of the transaction, IFF’s largest shareholder, Winder
Investments, has agreed to vote in favor of the transaction. The
parties target closing the deal by the end of the first quarter of
2021. IFF and N&B have obtained fully-committed debt financing
from Morgan Stanley and Credit Suisse. The combined company is
committed to maintaining an investment grade rating.
Advisors
Greenhill & Co. LLC and Morgan Stanley & Co. LLC are
serving as IFF’s financial advisors and Cleary Gottlieb Steen &
Hamilton LLP is serving as legal counsel. Credit Suisse Securities
(USA) LLC and Evercore are serving as DuPont’s financial advisors
and Skadden, Arps, Slate, Meagher & Flom LLP is serving as
legal counsel.
Conference Call Details
The two companies will host a joint conference call on Monday,
December 16, 2019, at 7:30 am ET to discuss the announcement. The
call will include a slide presentation and participants are
encouraged to view the presentation via webcast at
www.strongerinnovationtogether.com/investors.
The conference call may also be accessed by dialing: (877)
830-2586 (Toll Free) or (785) 424-1734 (International) and using
the Conference ID: 121619. A replay will be available for
approximately 90 days and can be accessed by dialing: (800)
839-4199 (Toll Free) or (402) 220-2989 (International).
Additional information about the combination of IFF and N&B
can be found at www.strongerinnovationtogether.com.
About IFF
At IFF (NYSE:IFF) (Euronext Paris:IFF) (TASE:IFF), we’re using
Uncommon Sense to create what the world needs. As a collective of
unconventional thinkers and creators, we put science and artistry
to work to create unique and unexpected scents, tastes, experiences
and ingredients for the products our world craves. Learn more at
iff.com, Twitter, Facebook, Instagram, and LinkedIn.
About DuPont
DuPont (NYSE: DD) is a global innovation leader with
technology-based materials, ingredients and solutions that help
transform industries and everyday life. Our employees apply diverse
science and expertise to help customers advance their best ideas
and deliver essential innovations in key markets including
electronics, transportation, construction, water, health and
wellness, food and worker safety. More information can be found at
www.dupont.com.
About DuPont Nutrition & Biosciences
DuPont Nutrition & Biosciences applies expert science to
advance market-driven, healthy and sustainable solutions for the
food, beverage, dietary supplement and pharmaceutical industries.
We also use cutting-edge biotechnology across a range of markets to
advance bio-based solutions to meet the needs of a growing
population, while protecting our environment for future
generations. We are innovative solvers who help our customers turn
challenges into high-value business opportunities. For more
information: www.dupontnutritionandhealth.com or www.biosciences.dupont.com.
Additional Information and Where to Find It
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote of approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended (the “Securities Act”). In connection with the proposed
combination of Nutrition & Biosciences, Inc. (“N&Bco”), a
wholly owned subsidiary of DuPont de Nemours, Inc. (“DuPont”), and
International Flavors & Fragrances Inc. (“IFF”), which will
immediately follow the proposed separation of N&Bco from DuPont
(the “proposed transaction”), N&Bco, IFF, Neptune Merger Sub I
Inc. (“Merger Sub I”) and Neptune Merger Sub II LLC (“Merger Sub
II”) intend to file relevant materials with the SEC, including a
registration statement on Form S-4 that will include a proxy
statement/prospectus relating to the proposed transaction. In
addition, N&Bco expects to file a registration statement in
connection with its separation from DuPont. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENTS, PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT IFF, N&BCO, MERGER SUB I, MERGER SUB II AND THE PROPOSED
TRANSACTION. A definitive proxy statement will be sent to
shareholders of IFF seeking approval of the proposed transaction.
The documents relating to the proposed transaction (when they are
available) can be obtained free of charge from the SEC’s website at
www.sec.gov. Free copies of these
documents, once available, and each of the companies’ other filings
with the SEC may also be obtained from the respective companies by
contacting the investor relations department of DuPont or IFF at
the following:
Cautionary Note on Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of the federal securities laws, including Section 27A
of the Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” “will,” “would,” “target,” similar
expressions, and variations or negatives of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
proposed transaction, the expected timetable for completing the
proposed transaction, the benefits and synergies of the proposed
transaction, future opportunities for the combined company and
products and any other statements regarding DuPont’s, IFF’s and
N&Bco’s future operations, financial or operating results,
capital allocation, dividend policy, debt ratio, anticipated
business levels, future earnings, planned activities, anticipated
growth, market opportunities, strategies, competitions, and other
expectations and targets for future periods. There are several
factors which could cause actual plans and results to differ
materially from those expressed or implied in forward-looking
statements. Such factors include, but are not limited to, (1) the
parties’ ability to meet expectations regarding the timing,
completion and accounting and tax treatments of the proposed
transaction, (2) changes in relevant tax and other laws, (3) any
failure to obtain necessary regulatory approvals, approval of IFF’s
shareholders, anticipated tax treatment or any required financing
or to satisfy any of the other conditions to the proposed
transaction, (4) the possibility that unforeseen liabilities,
future capital expenditures, revenues, expenses, earnings,
synergies, economic performance, indebtedness, financial condition,
losses, future prospects, business and management strategies that
could impact the value, timing or pursuit of the proposed
transaction, (5) risks and costs and pursuit and/or implementation
of the separation of N&Bco, including timing anticipated to
complete the separation, any changes to the configuration of
businesses included in the separation if implemented, (6) risks
related to indemnification of certain legacy liabilities of E. I.
du Pont de Nemours and Company (“Historical EID”) in connection
with the distribution of Corteva Inc. on June 1, 2019 (the “Corteva
Distribution”), (7) potential liability arising from fraudulent
conveyance and similar laws in connection with DuPont’s
distribution of Dow Inc. on April 1, 2019 and/or the Corteva
Distributions (the “Previous Distributions”), (8) failure to
effectively manage acquisitions, divestitures, alliances, joint
ventures and other portfolio changes, including meeting conditions
under the Letter Agreement entered in connection with the Corteva
Distribution, related to the transfer of certain levels of assets
and businesses, (9) uncertainty as to the long-term value of DuPont
common stock, (10) potential inability or reduced access to the
capital markets or increased cost of borrowings, including as a
result of a credit rating downgrade, (11) inherent uncertainties
involved in the estimates and judgments used in the preparation of
financial statements and the providing of estimates of financial
measures, in accordance with the accounting principles generally
accepted in the United States of America and related standards, or
on an adjusted basis, (12) the integration of IFF and its Frutarom
business and/or N&Bco being more difficult, time consuming or
costly than expected, (13) the failure to achieve expected or
targeted future financial and operating performance and results,
(14) the possibility that IFF may be unable to achieve expected
benefits, synergies and operating efficiencies in connection with
the proposed transaction within the expected time frames or at all
or to successfully integrate Frutarom and N&Bco, (15) customer
loss and business disruption being greater than expected following
the proposed transaction, (16) the impact of divestitures required
as a condition to consummation of the proposed transaction as well
as other conditional commitments, (17) legislative, regulatory and
economic developments; (18) an increase or decrease in the
anticipated transaction taxes (including due to any changes to tax
legislation and its impact on tax rates (and the timing of the
effectiveness of any such changes)) to be paid in connection with
the separation prior to the closing of the transactions could cause
an adjustment to the exchange ratio, (19) potential litigation
relating to the proposed transaction that could be instituted
against DuPont, IFF or their respective directors, (20) risks
associated with third party contracts containing consent and/or
other provisions that may be triggered by the proposed transaction,
(21) negative effects of the announcement or the consummation of
the transaction on the market price of DuPont’s and/or IFF’s common
stock, (22) risks relating to the value of the IFF shares to be
issued in the transaction and uncertainty as to the long-term value
of IFF’s common stock, (23) risks relating to IFF’s ongoing
investigations into improper payments made in Frutarom businesses
principally operating in Russia and the Ukraine, including expenses
incurred with respect to the investigations, the cost of any
remedial measures or compliance programs arising out of the
investigations, legal proceedings or government investigations that
may arise relating to the subject of IFF’s investigations, and the
outcome of any such legal or government investigations, such as the
imposition of fines, penalties, orders, or injunctions, (24) the
impact of the failure to comply with U.S. or foreign
anti-corruption and anti-bribery laws and regulations, including
with respect to IFF’s ongoing investigations into improper payments
made in Frutarom businesses principally operating in Russia and the
Ukraine, (25) the impact of the outcome of legal claims, regulatory
investigations and litigation, including any that may arise out of
IFF’s ongoing investigations into improper payments made in
Frutarom businesses principally operating in Russia and the
Ukraine, (26) the ability of N&Bco or IFF to retain and hire
key personnel, (27) the risk that N&Bco, as a newly formed
entity that currently has no credit rating, will not have access to
the capital markets on acceptable terms, (28) the risk that
N&Bco and IFF will incur significant indebtedness in connection
with the potential transaction, and the degree to which IFF will be
leveraged following completion of the potential transaction may
materially and adversely affect its business, financial condition
and results of operations, (29) the ability to obtain or consummate
financing or refinancing related to the transaction upon acceptable
terms or at all, and (30) other risks to DuPont’s, N&Bco’s and
IFF’s business, operations and results of operations including
from: failure to develop and market new products and optimally
manage product life cycles; ability, cost and impact on business
operations, including the supply chain, of responding to changes in
market acceptance, rules, regulations and policies and failure to
respond to such changes; outcome of significant litigation,
environmental matters and other commitments and contingencies;
failure to appropriately manage process safety and product
stewardship issues; global economic and capital market conditions,
including the continued availability of capital and financing, as
well as inflation, interest and currency exchange rates; changes in
political conditions, including tariffs, trade disputes and
retaliatory actions; impairment of goodwill or intangible assets;
the availability of and fluctuations in the cost of energy and raw
materials; business or supply disruption, including in connection
with the Previous Distributions; security threats, such as acts of
sabotage, terrorism or war, natural disasters and weather events
and patterns which could result in a significant operational event
for DuPont, N&Bco or IFF, adversely impact demand or
production; ability to discover, develop and protect new
technologies and to protect and enforce DuPont’s, N&Bco’s or
IFF’s intellectual property rights; unpredictability and severity
of catastrophic events, including, but not limited to, acts of
terrorism or outbreak of war or hostilities, as well as
management’s response to any of the aforementioned factors. These
risks, as well as other risks associated with the proposed merger,
will be more fully discussed in the registration statement and
merger proxy on Form S-4 to be filed by IFF and the registration
statement on Form 10 to be filed by N&Bco. While the list of
factors presented here is, and the list of factors to be presented
in any registration statement filed in connection with the
transaction are, considered representative, no such list should be
considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward looking statements. Further
lists and descriptions of risks and uncertainties can be found in
each of IFF’s and DuPont’s Form 10-Q for the period ended September
30, 2019 and each of IFF’s and DuPont’s respective subsequent
reports on Form 10-Q, Form 10-K and Form 8-K, the contents of which
are not incorporated by reference into, nor do they form part of,
this announcement. Any other risks associated with the proposed
transaction will be more fully discussed in any registration
statement filed with the SEC. While the list of factors presented
here is, and the list of factors that may be presented in a
registration statement of IFF or N&Bco would be, considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward looking statements. Consequences of material
differences in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material adverse effect on IFF’s, DuPont’s or N&Bco’s
consolidated financial condition, results of operations, credit
rating or liquidity. None of IFF, DuPont nor N&Bco assumes any
obligation to publicly provide revisions or updates to any
forward-looking statements, whether as a result of new information,
future developments or otherwise, should circumstances change,
except as otherwise required by securities and other applicable
laws.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any
investor or security holder. However, DuPont, IFF and certain of
their respective directors and executive officers may be deemed to
be participants in the solicitation of proxies in connection with
the proposed transaction under the rules of the SEC. Information
about the directors and executive officers of DuPont may be found
in its Annual Report on Form 10-K filed with the SEC on February
11, 2019 and its definitive proxy statement filed with the SEC on
May 1, 2019. Information about the directors and executive officers
of IFF may be found in its definitive proxy statement filed with
the SEC on March 18, 2019. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the registration statements, prospectuses and
proxy statement and other relevant materials to be filed with the
SEC when they become available.
1 Adjusted EPS is on a pro forma basis and is a non-GAAP
measure. Refer to the Reconciliation of Adjusted Earnings Per Share
Outlook included in DuPont’s third quarter earnings announcement
released on October 31, 2019 which can be found on the Investors
section of our website.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191215005031/en/
IFF Michael DeVeau
Michael.DeVeau@iff.com +1 212-708-1212 DuPont Investors: Lori Koch
Lori.d.koch@dupont.com +1 302-999-5631 DuPont Media: Dan Turner
Daniel.a.turner@dupont.com +1 302-996-8372
DuPont de Nemours (NYSE:DD)
Historical Stock Chart
From Aug 2024 to Sep 2024
DuPont de Nemours (NYSE:DD)
Historical Stock Chart
From Sep 2023 to Sep 2024