Please ensure Javascript is enabled for purposes of website accessibility

Why International Flavors & Fragrances (IFF) Stock Jumped Today

By Howard Smith - Feb 1, 2021 at 5:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

IFF announced the completion of its previously announced merger with a unit of DuPont de Nemours.

What happened

Shares of International Flavors & Fragrances (IFF 0.12%) closed 16% higher Monday. The company announced it will complete a previously announced merger with the Nutrition & Biosciences (N&B) unit of chemical giant DuPont de Nemours (DD -1.49%). Shares of DuPont were down 8% at the same time. 

So what

The newly combined company will be a leader in the global markets for ingredients used in food and beverages, health and wellness, and personal care. Including the addition of the DuPont business, 2020 pro forma, or anticipated revenue, for the company to operate under the IFF name would have exceeded $11 billion.  

Home cook enjoying the aromas wafting up from a bowl of cooked vegetables on the stove.

Image source: Getty Images.

Now what

DuPont was paid $7.3 billion to merge the business unit into IFF, and DuPont shareholders own 55.4% of the combined company. IFF also announced the initiation of a new brand identity and tagline -- "Where science and creativity meet" -- for the combined businesses. 

Last week, IFF released preliminary fourth-quarter and full-year 2020 results, saying it expects to beat its own expectations "despite continued challenges and complexity of the pandemic." Fourth-quarter sales increased 2% compared to the prior-year period, and full-year sales slightly exceeded $5 billion, the company said. 

With the addition of the DuPont unit, IFF will be valued at a price-to-sales ratio of approximately 1.25, down from a value of about 3 prior to folding in the additional revenue, which explains the jump in IFF shares today.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

International Flavors & Fragrances Inc. Stock Quote
International Flavors & Fragrances Inc.
$119.26 (0.12%) $0.14
DuPont de Nemours, Inc. Stock Quote
DuPont de Nemours, Inc.
$54.75 (-1.49%) $0.83

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.