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IFF To Merge With DuPont's Nutrition & Biosciences Unit; Backs FY19 Outlook

International Flavors & Fragrances Inc. or IFF (IFF) and DuPont (DD) announced Sunday that they have entered into a definitive agreement, under which IFF will be merged with DuPont's Nutrition & Biosciences or 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.

The transaction has been unanimously approved by both Boards of Directors.

Upon completion of the transaction, DuPont will receive a one-time $7.3 billion special cash payment, subject to certain adjustments. The transaction is expected to be tax-free to DuPont and its shareholders for U.S. federal income tax purposes.

Under the deal terms, DuPont shareholders will own 55.4% of the shares of the new company and existing IFF shareholders will own 44.6%.

The transaction is subject to approval by IFF shareholders and other customary closing conditions, including regulatory approvals. IFF's largest shareholder, Winder Investments, has agreed to vote in favor of the deal.

The companies expect to close the deal by the end of the first quarter of 2021.

The combination of IFF and N&B will create a major player in high-value ingredients and solutions for global Food & Beverage, Home & Personal Care and Health & Wellness markets. The combined company will have estimated 2019 pro forma revenue of more than $11 billion and EBITDA of $2.6 billion, excluding synergies.

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.

IFF expects to realize cost synergies of approximately $300 million on a run-rate basis by the end of the third year post-closing.

Further, IFF reconfirmed its full-year 2019 projections for sales to be between $5.15 billion and $5.25 billion with adjusted earnings per share to be between $4.85 and $5.05 and adjusted earnings per share excluding amortization to be between $6.15 and $6.35.

DuPont also reconfirmed its expectations for total annual revenue of approximately $21.5 billion and an adjusted earnings per share 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 and Electronics & Imaging.

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