On-track: Shareholders give nod to DuPont N&B and IFF merger

28 Aug 2020 --- IFF shareholders have voted to approve the issuance of shares of IFF common stock in relation to the company’s upcoming merger with DuPont’s Nutrition & Biosciences (N&B) business. The transaction remains on track and is due to close in the first quarter of 2021, subject to regulatory approvals and conditions. DuPont has also published its second quarter 2020 results, which reveal strong growth in the probiotics business, despite N&B’s net sales being down 1 percent from the year-ago period.

Michael Deveau, an IFF spokesperson tells NutritionInsight that the merger will allow the company to better serve its customers and to accelerate their growth. “This is through our ability to provide a more comprehensive solution set, increased scale, category diversification, global reach and a broader set of capabilities. This will enable the combined company to be an immediate leader in the rapid consumer-driven industry evolution toward healthier, better-for-you products.”

“We are pleased to have received the strong support of IFF shareholders, who have recognized this unique opportunity to create a leading ingredients and solutions provider which is better positioned to meet our customers’ evolving needs and unlock long-term value creation,” adds IFF Chairman and CEO, Andreas Fibig.

Based on the preliminary count of proxies returned prior to its special meeting and, with more than 99 percent of the votes cast in favor, IFF shareholders “overwhelmingly” approved the issuance of shares pursuant to the merger agreement. The final voting results will be publicly filed with the US Securities and Exchange Commission (SEC) on a Form 8-K within four business days.

Fibig details that they have already made good progress in the integration planning process to develop a purpose, vision and operating structure for the future combined company. One recent completed milestone is N&B and IFF filing their respective initial registration statements in May. They are now advancing the review process with the SEC.

DuPont and IFF have also announced the future combined company’s executive committee, which will include key senior leaders from DuPont Nutrition & Biosciences and IFF. Additionally, the merger cleared the US regulatory process, followed by receiving clearance from China, Serbia and Colombia. Clearance processes in the remaining required jurisdictions are well underway.

“Each of these accomplishments represents critical milestones to create a market-leading company and to generate significant value for our shareholders. Our business teams, customers and partners see tremendous opportunity for growth and greater innovation as the businesses come together,” says Ed Breen, DuPont Executive Chairman and CEO. He will join the board of the combined company following the close of the transaction and will serve as Lead Independent Director starting June 1, 2021.

Over the next six months, DuPont will continue its integration planning work with IFF to enable a smooth, successful launch, he adds. This will position the future combined company to achieve its committed cost and revenue synergies.The probiotic business within Health & Biosciences recorded another record quarter.

Results “ahead of expectations”
DuPont states that it delivered second-quarter 2020 results ahead of expectations, despite significant declines in global economic activity. “The quick and decisive actions we took in the early days of the pandemic to strengthen our balance sheet, increase our cost savings initiatives and differentially manage our portfolio enabled us to deliver a solid quarter. Our businesses are well-equipped to build upon their leading market positions and outperform when markets fully recover,” says Lori Koch, DuPont Chief Financial Officer.

Overall net sales are down 12 percent from the year-ago period to US$4.8 billion. Operating EBITDA was US$1.1 billion, down 20 percent versus operating EBITDA in the prior year. On a regional basis, organic sales increased 1 percent in Asia Pacific versus the year-ago period while the US and Canada, EMEA and Latin America each declined mid-to-high teens percent. China sales in our core segments improved 6 percent versus the second quarter 2019 and 20 percent sequentially from first quarter 2020.

Within N&B, net sales were of US$1.5 billion, down 1 percent from the year-ago period. Organic sales were up 1 percent with volume up 1 percent; price was flat. Currency was a 2 percent headwind. However, 85 percent of the segment also saw mid-single-digit growth driven by strength in F&B and health and wellness end markets. This was partially offset by declines in businesses exposed to energy and industrial markets. 

Operating EBITDA for the segment was US$418 million, an increase of 8 percent from operating EBITDA of US$386 million in the year-ago period. Notably, the probiotic business within Health & Biosciences recorded another record quarter with over 30 percent organic growth. The company is not alone in seeing probiotic growth, with Probi also noting a boost in sales. 

Innova Market Insights reports that probiotic supplements are on the rise. While probiotics only represented 3 percent of supplement launches in 2015 and 2016, this rose to 10 percent in 2018. Meanwhile, capsules are the leading delivery format, accounting for 31 percent of probiotic supplement launches in 2017. However, powder is growing fast, leaping from 15 percent in 2014 and 22 percent in 2018. In 2019, 94 percent of launches included a digestive/liver health claim, while 49 percent were touted for immune health, according to the market researcher.

Edited by Katherine Durrell