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Acquisitions (Notes)
12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract]  
Acquisitions ACQUISITIONS
Transaction with Nutrition & Biosciences, Inc.
On February 1, 2021 (the "Closing Date"), the Company completed the combination of IFF and DuPont de Nemours, Inc's. ("DuPont") nutrition and biosciences business (the "N&B Business") which had been transferred to Nutrition & Biosciences, Inc., a Delaware corporation and wholly owned subsidiary of DuPont ("N&B") in a Reverse Morris Trust transaction. The N&B Business is an innovation-driven and customer-focused business that provides solutions for the global food and beverage, dietary supplements, home and personal care, energy, animal nutrition and pharma markets. IFF acquired 100% interest of N&B pursuant to definitive agreements, including an Agreement and Plan of Merger (the "Merger Agreement") entered into on December 15, 2019. The transaction was made in order to strengthen IFF's customer base and market presence, with an enhanced position in the food & beverage, home & personal care and health & wellness markets.
On the Closing Date, a wholly owned subsidiary of IFF merged with and into N&B, with N&B surviving as a wholly owned subsidiary of IFF (the "Merger"). As of the effective time of the Merger, each issued and outstanding share of common stock of N&B (except for shares of common stock of N&B held by N&B as treasury stock or by DuPont, which were canceled and ceased to exist and no consideration was delivered in exchange therefor) was converted into the right to receive one share of common stock of IFF. The Merger was completed in exchange for 141,740,461 shares of IFF common stock, par value $0.125 per share (or cash payment in lieu of fractional shares), which had been approved in the special shareholder meeting that occurred on August 27, 2020 where IFF shareholders voted to approve the issuance of shares of IFF common stock in connection with the N&B Transaction pursuant to the Merger Agreement. In connection with the N&B Transaction, DuPont received a one-time $7.3 billion special cash payment (the “Special Cash Payment”). The shares issued in the Merger represented approximately 55.4% of the common stock of IFF on a fully diluted basis, after giving effect to the Merger, as of February 1, 2021.
The acquisition will be accounted for using the purchase method of accounting, and N&B's assets, liabilities and results of operations will be included in the Company's financial statements from the Closing Date.
On December 15, 2019, IFF and N&B entered into a commitment letter which provided $7.5 billion in an aggregate principal amount of senior unsecured bridge term loans (the "Bridge Loans"). On January 17, 2020, N&B entered into a term loan credit agreement, as amended on August 25, 2020, providing for unsecured term loan facilities in an aggregate principal amount of $1.25 billion (the “N&B Term Loan Facilities”), which reduced the commitments under the Bridge Loans commitment letter by a corresponding amount. On September 16, 2020, N&B issued $6.25 billion of senior unsecured notes (the “N&B Notes”), which reduced the remaining commitments under the Bridge Loans commitment letter in their entirety. The Bridge Loans commitment letter was also terminated as of such date. On the Closing Date, N&B borrowed $1.25 billion under the N&B Term Loan Facilities. The N&B Notes, together with the N&B Term Loan Facilities, were used to finance the Special Cash Payment and to pay related fees and expenses. Following the consummation of the N&B Transaction, all obligations of N&B with respect to the N&B Term Loan Facilities and the N&B Notes have been guaranteed by IFF. In lieu of IFF continuing to provide these guarantees, IFF intends to assume all of N&B obligations under the Term Loan Facilities and the N&B Notes and accordingly, these amounts will be reflected as long term debt in the accompanying Consolidated Balance Sheet.
Due to the limited time between the Closing Date and IFF's filing of this Annual Report on Form 10-K for the fiscal year ended December 31, 2020, the valuation report and initial accounting for the business combination is not yet available and the Company is unable to disclose certain information required by ASC Topic 805, Business Combinations. The Company plans to provide preliminary purchase price allocation information in IFF's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.
2019 Acquisition Activity
During the second quarter of 2019, the Company acquired the remaining 50% interest in an equity method investee located in Canada. The purchase of the additional interest increased the Company's ownership of the investee to 100%, and the acquired entity is managed under the Taste segment. The purchase price for the remaining 50% was approximately $37 million, including cash and an accrual for the amount expected to be paid in contingent consideration. The Company began to consolidate the results of the acquired entity from the date on which it acquired the remaining 50% interest during the second quarter of 2019. Goodwill of approximately $30 million and intangible assets of $20 million were recorded in connection with the acquisition.
During the first quarter of 2019, the Company acquired 70% of a company in Europe and increased its ownership of an Asian company from 49% to 60%. The two acquired entities, which manufacture flavor products, are managed under the Taste segment. The total purchase price for the two acquisitions made in the first quarter of 2019 was $52 million, excluding cash acquired and including $19 million of contingent consideration and deferred payments. The purchase price allocations have been performed and resulted in goodwill of approximately $47 million and intangible assets of $28 million.
During the first quarter of 2020, the Company completed the purchase price allocations for all three of the transactions that were made during 2019. As a result of finalizing the purchase price allocations, adjustments were recorded to increase fixed assets by $13 million, customer relationships and other intangible assets by $5 million and approximately $3 million related to deferred tax liabilities and to decrease goodwill by $15 million. The income statement impact of the finalization of purchase accounting was not material.
Pro forma information has not been presented as the entities acquired in 2019 are not material.
Frutarom
On October 4, 2018 (the "Frutarom Closing"), the Company completed its acquisition of 100% of Frutarom Industries Ltd. (“Frutarom”), which was accounted for using the purchase method of accounting in accordance with ASC Topic 805, Business Combinations, with IFF identified as the acquirer.
The Company paid approximately $7.0 billion for the acquisition, including $4.3 billion in cash and $2.0 billion in equity. At the Frutarom Closing, each issued and outstanding Frutarom ordinary share was exchanged for $71.19 in cash and 0.2490 of a share of the Company's common stock. A portion of Frutarom’s existing debt was repaid concurrent with the Frutarom Closing. Frutarom's debt, which was not legally assumed by IFF but was paid at the Frutarom Closing, was approximately $695.0 million. This made up the remainder of the purchase consideration. To finance the acquisition, the Company used cash on hand and borrowed approximately $3.3 billion of additional debt, consisting of $2.8 billion of senior unsecured notes, $350.0 million in term loans and $139.5 million of tangible equity units ("TEUs"). See Notes 8 and 9 for further details. The Company issued 14.9 million shares as a portion of the purchase consideration resulting in former Frutarom shareholders holding approximately 14% of the Company's outstanding common stock as of the Frutarom Closing. Additionally, the Company issued 16,500,000 TEUs in an underwritten public offering for net proceeds of approximately $665.1 million.