U.S. IFF to buy Israel's flavor ingredients company Frutarom for $7.1 billion

U.S.-based International Flavors & Fragrances Inc. agreed to buy Israeli flavors and ingredients maker Frutarom for $7.1 billion in a cash and stock, vying for the industry’s top spot with market leader Givaudan.

Under the deal, which has been approved by both boards, Frutarom’s shareholders will receive for each Frutarom share $71.19 in cash and 0.249 per share of IFF common stock for a total value of $106.25 per share. The two companies will have combined revenue of $5.3 billion in 2018.

IFF and Frutarom said they expect to realize some $145 million of cost synergies by the third full year after closing, with about 25 percent achieved in the first full year. The deal is expected to be neutral to adjusted cash earnings per share in the first year and double-digit accretive to adjusted cash earnings per share in the second year.

In February, Frutarom announced that it would acquire Israel's cosmetics and food ingredients manufacturer IBR Ltd. for $21 million.