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IFF

International Flavors to Buy Flavors Company David Michael

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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.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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