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International Flavors and Fragrances to Acquire David Michael

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IFF to acquire David Michael

On September 13, International Flavors and Fragrances (IFF) announced that it entered into an agreement to acquire food flavor company David Michael. The acquisition is expected to be completed by 4Q16, subject to regulatory approval. Until that time, both companies will operate independently.

International Flavors and Fragrances notes that the transaction will be funded from its existing resources. IFF did not disclose the terms of the acquisition.

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In fiscal 2015, International Flavors and Fragrances (IFF) recorded revenues of ~$3.0 billion. In 2017, IFF expects David Michael to contribute $85 million in revenues. IFF expects to increase its revenue by $500 million–$1 billion by 2020. This would be a significant step toward achieving one of the objectives of the company’s 2020 vision.

Andreas Fibig, IFF’s chairman and CEO, noted, “This bolt-on acquisition of David Michael is another important milestone in IFF’s Vision 2020 business strategy, helping us to win where we compete in the world’s largest flavors market as we look to further accelerate growth.”

IFF’s stock price

On September 16, 2016, International Flavors and Fragrances (IFF) closed at $135.85, up 0.8% for the week. IFF’s stock price closed 4.2% higher than its 100-day moving average price of $130.33, indicating an upward trend in the stock.

Analysts expect IFF’s 12-month target price to be $146.20, implying a potential return of ~7.6% over the closing price of September 16, 2016. On a year-to-date basis, IFF has risen 13.5%.

The iShares Russell Mid-Cap Growth ETF (IWP), which held 0.4% in IFF on September 16, fell 0.9% for the week and closed at $95.67. The top holdings of this fund include Nvidia (NVDA), Intuitive Surgical (ISRG), and Illumina (ILMN), with weights of 1.2%, 0.95%, and 0.93%, respectively.

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