Activist investor takes stake in International Flavors & Fragrances

25 Feb 2021

Earlier this month, the activist investor Sachem Head Capital Management took a $1 billion stake in the ingredients and chemical company International Flavors & Fragrances (IFF), Reuters reported.

According to sources, this move was spurred by Scott Ferguson, the hedge fund head of the investment firm, who intends to improve IFF’s financial performance and help integrate the recent merger of IFF and DuPont’s nutrition unit. In early February, IFF and DuPont completed a $26.2 billion merger that blended the companies into one of the biggest players in the ingredient space with an estimated pro forma revenue of $11 billion for 2020.

Activist investor takes stake in International Flavors & Fragrances

The merger with DuPont was not IFF’s first foray into M&A as IFF has a history of looking to M&A to fuel growth. In 2017, IFF acquired PowderPure, in 2016 it was David Michael & Co. and in 2015 the company assumed ownership of Ottens Flavors.

However, M&A is not always a straightforward process, and IFF has a history of rocky integrations. Its last purchase was in 2018 when it acquired Israel-based Frutarom for $7.1 billion. A year later, IFF found that operators in Russia and Ukraine allegedly paid bribes to customs officials and distributors. The case is currently in court as a federal class action suit.

Although this most recent merger with DuPont is also unlikely to exhibit the same issues that were uncovered with Frutarom as it was a heavily scrutinized and very public merger, having an investor help pave the path for a smooth transition has the ability to ensure that this megamerger is a profitable move rather than another liability for the flavor company.

Even if everything with the merger goes smoothly, there is still reportedly plenty of room for IFF to improve its books. Reuters reported that the research firm Gordon Haskett has maintained that IFF would be a good choice for an activist investor as the company’s shares lagged behind its competitors.

Other big names in the ingredients space include Kerry, which has made several major M&A deals in recent years and has increased its focus on plant-based ingredient alternatives. Ingredion is another major competitor in the space that has also looked toward technology for growth. Givaudan and McCormick round out the pack of those companies that are vying to control the market among ingredients manufacturers.

Although IFF has been the caboose within the ingredients industry, its sales have grown from $3 billion in 2014 to $11 billion today, per its most recent quarterly earnings report released in February. Nevertheless, Sachem Head may see this as only the beginning of the company’s growth and by stepping in it hopes to boost the bottom line as well as IFF’s EBIDTA.

Related news

DSM acquires Amyris’ bio-based flavors and fragrances business

DSM acquires Amyris’ bio-based flavors and fragrances business

9 Apr 2021

Netherlands-based Royal DSM acquired the flavor and fragrance bio-based intermediates business of California-based Amyris in order to extend the Dutch corporation’s presence in bio-based flavor and fragrance ingredients. The transaction was completed o...

Read more 
‘Bread as good as veg’: Modern Baker makes bread better with science-based Superloaf

‘Bread as good as veg’: Modern Baker makes bread better with science-based Superloaf

8 Apr 2021

Packing in 12 high-fibre, plant-based ingredients and no additives, Modern Baker’s Superloaf claims to be as healthy as eating vegetables, and has won the praise of ‘gut guru’, Dr Tim Spector.

Read more 
Danone Manifesto Ventures makes first UK-based investment

Danone Manifesto Ventures makes first UK-based investment

8 Apr 2021

Danone’s VC arm, Danone Manifesto Ventures (DMV) made its first investment in a UK-based business with its commitment to a £2.5m funding round for the healthy drinks brand Moju. Moju said the French Dairy giant’s minority investment in the company will...

Read more 
AeroFarms goes public through merger with Spring Valley Acquisition

AeroFarms goes public through merger with Spring Valley Acquisition

5 Apr 2021

Vertical farm company AeroFarms merged with the publicly traded special purpose acquisition company (SPAC), Spring Valley Acquisition in order to continue the expansion of the greens grower both in terms of production and distribution. The transaction ...

Read more 
Topo Chico finally debuts its hard seltzer

Topo Chico finally debuts its hard seltzer

1 Apr 2021

Molson Coors Beverage Company, which is exclusively manufacturing Topo Chico Hard Seltzer through a brand authorization agreement with Coca-Cola, finally released the concept onto shelves on March 29 after announcing the development of the brand in Jul...

Read more 
Chobani enters into pilot program with PepsiCo

Chobani enters into pilot program with PepsiCo

30 Mar 2021

Greek yogurt maker Chobani recently entered into a distribution partnership with PepsiCo to sell its new yogurt drinks at convenience stores, colleges and universities in the northeastern part of the U.S. In the original report on this news, Bloomberg ...

Read more 
Unilever and Nestlé petition to phase out caged hens in Europe

Unilever and Nestlé petition to phase out caged hens in Europe

29 Mar 2021

In a letter to the European Commission, major food titans called on the government to end the practice of raising hens in cages in the European agricultural sector. To accomplish this push, industry heavyweights Unilever and Nestlé partnered with the o...

Read more 
Alaska takes on 21 companies in a $1 billion price-fixing lawsuit

Alaska takes on 21 companies in a $1 billion price-fixing lawsuit

26 Mar 2021

The state of Alaska filed a lawsuit a $1.05 billion lawsuit against 21 chicken producers, accusing these companies of price fixing. In its filing, the State of Alaska is asking for $50 million in damage and restitution payments from each defendant.

Read more 
Swiss cultivated meat start-up raises $2.2m; aims for 2022 product launch

Swiss cultivated meat start-up raises $2.2m; aims for 2022 product launch

26 Mar 2021

This month, Swiss cell-cultured meat start-up Mirai Foods announced it raised US$2.2 million in a second seed round, bringing the total seed financing raised in 2021 to $4.5m.

Read more 
Givaudan launches new digital sensory insights tool

Givaudan launches new digital sensory insights tool

25 Mar 2021

Givaudan Taste & Wellbeing has introduced a new digital tool which uses AI and aroma technology to enhance its understanding of consumer preferences.

Read more