IFF sells Savory Solutions Group for $900M

Dive Brief:

• International Flavors & Fragrances plans to sell its Savory Solutions Group to private equity firm PAI Partners in a deal valuing the business at $900 million. The sale is expected to close in the second quarter of 2023. 
• The segment focuses primarily on prepared foods and foodservice ingredients, including products for butchers and plant-based meat analog makers. It has about 1,800 employees at business units in Austria, Germany, Italy, Ireland, Poland, Canada, Mexico and Thailand, and generated about $475 million in revenue in the last 12 months.
• At IFF’s Investor Day earlier this month, CEO Frank Clyburn said the company planned to announce three sales of non-core businesses units in the next quarter. This is the first divestiture of that group.

Dive Insight:

When IFF merged with the former DuPont Nutrition & Biosciences last year, it created a sprawling mega-company that could address many aspects of food, fragrances, ingredients and chemical businesses. Since the merger, IFF has worked to integrate the new segments and sell off some that didn’t quite fit its business goals, including microbial controls and fruit processing businesses.

At the Investor Day presentation earlier this month, Clyburn, who took the helm at IFF earlier this year, outlined a new strategy for a company that has its eyes on growth through capitalizing on opportunities. According to a presentation Clyburn made, the company plans to invest in “winners” — the companies that bring about 55% of IFF’s revenues, use management approaches to maximize the company’s “core” businesesses — which bring about 25% of revenues — and either optimize or divest the rest.

In a written statement, Clyburn called the sale of the Savory Solutions Group “an important milestone” for IFF. The sale will help the company “focus on our highest-return businesses, improve our capital structure and enhance our go-forward growth and return profile.” 

The Savory Solutions Group is a set of brands that came to IFF as part of its 2018 acquisition of Frutarom. It’s long been a target for divestment. Unnamed sources told Unquote this spring that the business would generate significant interest from private equity buyers.

PAI Partners, which is based in France, owns several significant food brands. The firm bought Tropicana from PepsiCo last year for $3.3 billion. The firm is also the majority stakeholder of Froneri, a joint venture with Nestlé that owns all of the manufacturer’s former ice cream brands.

IFF plans to use the proceeds of this sale to reduce its debt. This will help IFF’s balance sheet and allow the company have more to invest in other parts of its portfolio.

Clyburn said at Investor Day that the divestitures would be worth about $1.3 billion. The Savory Solutions business is the largest chunk of that, with two more to come in the near future. It’s not clear which businesses IFF is looking to sell, but there are clues. In the slide presentation from Investor Day, the four businesses listed as “underperformers” included Savory Solutions, Texturants, Emulsifiers & Sweeteners and Protein Solutions.