IFF sells Flavor Specialty Ingredients business as another activist investor buys stake worth US$240M

USA – IFF, an American corporation that produces and markets flavours and fragrances, has entered into an agreement to sell its Flavor Specialty Ingredients (FSI) business to Exponent for $220 million in cash proceeds.

FSI is a leading manufacturer of specialty base aromas with a broad range of more than 1,000 aroma chemicals and natural extracts, which provide inputs primarily to the flavor market.

The business includes four dedicated manufacturing and distribution facilities at Teesside and Hartlepool, United Kingdom; Cincinnati, United States; and Pucheng, China.

The company has additional points of distribution in Mexico, Brazil, and Hong Kong and has approximately 340 employees.

The FSI business serves more than 970 customers and generated more than $100 million in revenue over the last 12 months.

IFF intends to use the cash proceeds from the transaction, net of taxes and expenses will be used to reduce outstanding debt.

Third Point stakes US$240m claim

Meanwhile, activist investor Third Point LLC has acquired 2.3 million shares of stock in International Flavors & Fragrances.

The stocks are worth more than $240 million, according to a disclosure filed this week with the Securities and Exchange Commission.

Dan Loeb, the head of Third Point, has a history of getting involved with companies in the food space and his investment in IFF is therefore not surprising.

Third Point spent US$3.5 billion on a 1.25% stake in Nestlé in 2017, laying out ideas for the world’s largest food company to improve its results both when it initially bought the stake and in 2018.

Loeb’s firm also took a position in the former Pinnacle Foods in 2018, about six months before Conagra Foods bought the company for US$10.9 billion.

And that same year, Third Point amassed a more than US$300 million stake in Campbell Soup as the CPG searched for a new CEO following challenges within its business.

IFF has already been dealing with at least one activist investor in the name of Carl Icahn who acquired a 4% stake in the company last year.

 In response, IFF added a new member to its board who came with a recommendation from Carl Icahn.

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