New York-based International Flavors & Fragrances Inc.IFF recently announced the signing of an acquisition deal that will strengthen its North American flavors business. The company has committed to buy Philadelphia, PA-based David Michael & Company, Incorporated. Financial terms of the deal were not disclosed.
As revealed, David Michael & Company, a privately-held flavors company, is recognised for its product line in the dairy and beverages industries. Among many products, the firm's vanilla-based flavors deserve a special mention.
International Flavors & Fragrances intends to fund the transaction through existing resources and is subject to regulatory approvals. The deal is anticipated to close in fourth-quarter 2016. Until completion, both the parties will operate separately.
With the addition of David Michael & Company, International Flavors & Fragrances expects to boost its flavours business among customers in the fast-growing middle-markets. Besides complimenting the company's IFF-Ottens Flavors business, the acquired assets will add incremental revenue of $85 million in 2017.
We believe such acquisitions are consistent with International Flavors & Fragrances' expansionary policy and its Vision 2020 business strategy. The company prefers to invest in acquisitions as a means to gain access to new customers, regions and technologies. A diverse portfolio and product mix, along with new business wins, should help the company deliver solid results in the quarters ahead.
INTL F & F Price
Despite these positives, exposure to near-term headwinds has limited International Flavors & Fragrances' growth momentum. The company, with a market capitalization of $10.8 billion, currently carries a Zacks Rank #3 (Hold).
Also, some of International Flavors & Fragrances' prime competitors continue to perform well, having gained high Zacks rankings. Better-ranked stocks in the industry include Green Plains Inc. GPRE , NL Industries Inc. NL and Ingevity Corporation NGVT . While both Green Plains and NL Industries sport a Zacks Rank #1 (Strong Buy), Ingevity Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.