IFF to Sell Microbial Control Business for $1.3B

International Flavors & Fragrances, Inc. (IFF) has agreed to sell its Microbial Control business unit to LANXESS in a deal worth $1.3 billion. The company manufactures and supplies flavors and fragrances used in the food, beverage, personal care and household products industries.

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The company seeks to use proceeds from this deal (after net taxes and expenses) to repay outstanding debt. The transaction is expected to close in the second quarter of 2022. (See IFF stock charts on TipRanks).

Microbial Control business unit provides preservation and hygiene solutions to a range of industrial and consumer applications, including paints & coatings, building materials, animal biosecurity, personal care, and home care.

The Chairman and CEO of IFF, Andreas Fibig, said, “This transaction is driven by the best-owner mindset and allows us to focus on our core businesses as we strengthen our balance sheet and maximize shareholder return. The divestiture also enhances IFF’s financial profile, providing growth acceleration and higher margins.”

On August 8, Wells Fargo analyst Michael Sison maintained a Buy rating on the stock and raised the price target to $170 from $168. The new price target implies 13.2% upside potential from current levels.

Sison notes, “We see the company off to a solid start toward achieving its goals on integration and synergies (both cost and revenue) for the DuPont N&B business. While the Delta variant does present some uncertainty to the global reopening, we see recent TSA air traveler throughput and restaurant tracker data pointing to a continued recovery in activity through at least 3Q21.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 5 Buys, 1 Hold and 1 Sell. The average IFF price target of $165.67 implies 10.3% upside potential.

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on IFF with 9.2% of investors on Tipranks increasing their exposure to IFF stock over the past 30 days.