3 February 2020 - In mid-December 2019, DuPont reached a deal to combine its Nutrition & Biosciences business (revenue of USD 6.2 billion in 2018, over 10,000 employees, 70 manufacturing sites and 25 innovation centres) with International Flavors & Fragrances (IFF), creating a global leader in ingredients and solutions for global food & beverage, home & personal care and health & wellness markets.
The parties target closing the deal in Q1, 2021, subject to IFF shareholder approval as well as certain regulatory approvals and other customary closing conditions. And upon completion, DuPont shareholders will own 55.4% of the combined company, while IFF's shareholders will own 44.6%.
The new company will continue to be called IFF and will be based in New York, with current IFF CEO Andreas Fibig serving as chairman. The firms said that the combined company will have “#1 or #2 positions across taste, texture, scent, nutrition, cultures, enzymes, soy proteins and probiotics categories.
At this stage, however, it remains to be seen what the ramifications are for the animal nutrition segment of DuPont Nutrition & Biosciences.
|
Aart Mateboer |
Aart Mateboer (Business Unit Director, DuPont Animal Nutrition; and new member of the ‘Feedinfo Leaders’ Network’, involved with the development of The Feedinfo Summit in September 2020) was able to shed some light on the animal nutrition agenda for DuPont in the coming months. And Daniel Turner (Dupont spokesperson) provided a quick glimpse of early 2021, when the IFF transaction closes. As far as 2020 goes, DuPont is planning to invest significantly in the animal nutrition business as the company is already in the process of expanding regional capabilities. “We will be opening a new EMEA headquarters, meaning an expansion of our customer support capabilities in EMEA. At the same we will continue to expand our broad portfolio of products throughout the coming year, as we seek to deliver new solutions that address customer needs,” commented Mateboer. “On the applications side, we will continue to invest in our broad portfolio of enzymes, probiotics, betaine, phytogenics and combined technologies. In particular, deepening our knowledge of mode of action and further reducing feed costs for maximum profitability is a key focus,” he added. According to DuPont Animal Nutrition’s Business Unit Director, new product development will also form a key part of his company’s 2020 activity. “Our R&D programmes will invest in identifying feed solutions that support a favourable ‘nutribiotic state’ in the animal for optimum performance, as part of our strategic goal to bring products to market that enable antibiotic-free animal production. We will also announce a number of new product launches in the coming months,” he said. “We will strengthen our response to the many challenges shaping the industry; from maintaining productivity in the context of reduced use of antibiotics to rising consumer concerns around food safety, animal welfare and environmental impact,” Mateboer went on to say. One such challenge if of course is African swine fever (ASF) and its impact on the animal nutrition industry generally. |
Commenting on the ASF situation from the DuPont Animal Nutrition perspective, Mateboer said: “Last year, we saw a decrease in product demand from swine producers in Asia, while demand from poultry producers and swine producers in other geographies increased. Fortunately, we were able to mitigate the impact of this trend thanks to our strong capabilities in poultry. 2020 will be another year of uncertainty as ASF is still present. There are some early signals that in China the situation is now contained. However, it will take time for producers to build up the swine herd.”
“There is a risk of ASF further spreading, already this year, we have seen the German authorities announce its intention to step up measures to prevent ASF spreading from neighboring Poland. So, the real challenge for EMEA, as well as North America, is to either contain ASF or keep it out. In this context, our objective is to stay in very close contact with our customers and enable them to quickly respond to changes,” he added.
And finally on the M&A front this year, DuPont Animal Nutrition will continue to monitor the space closely and look for opportunities to acquire new technologies, either through partnerships or acquisitions.
And as we move towards 2021, it will be “business as usual” for DuPont Animal Nutrition, stressed Daniel Turner, DuPont spokesperson.
“DuPont Nutrition & Biosciences and IFF remain independent companies with their own operations and operational goals until the transaction closes, which is expected in Q1 2021 and subject to IFF shareholder approval as well as certain regulatory approvals and other customary closing conditions,” he stated.
So until then, DuPont Animal Nutrition will continue to serve customers in the same way it does today.
When asked what the IFF and the DuPont boards are saying about the future of the DuPont Animal Nutrition business (whether a strengthening of the business unit can be expected or a possible divestment considered), Turner simpy said it was too premature to comment.
Turner was also unable to comment on the specific synergies at animal nutrition level as the transaction has yet to close. But he did say that the combined entity is expected to realise cost synergies of approximately USD 300 million on an annualised basis by the end of 2023, driven primarily by “procurement excellence and manufacturing efficiencies.”
“The combined company’s goal is to generate approximately USD 430 million in revenue synergies by year three,” he said.
Echoing Aart Mateboer’s earlier comments about serving the customer base, Turner went on to say: “Together, IFF and DuPont Nutrition & Biosciences will create a category-defining, integrated value-added solutions partner, with an enhanced ability to deliver differentiated, integrated solutions to thousands of customers across a broad range of end markets. The combination will also allow us to better serve our customers and to accelerate their growth through our ability to provide a more comprehensive solution set, increased scale, category diversification, global reach and a broader set of capabilities, which will enable the combined company to respond to customer demand and evolving consumer preferences for natural and ‘better for you’ products.”
“Our highly-efficient business model will support continued growth and reinvestment in high-return areas. The combined company will be able to collaborate to create new solutions with the goal of delivering faster growth for customers.”