IFF Strikes Deal to Acquire David Michael & Co

14 Sep 2016

14 Sep 2016 --- International Flavors & Fragrances Inc is bolstering operations in the US by entering into an agreement to acquire David Michael & Company. Although IFF is not disclosing the financial details at this stage, it has sets its sights on the privately held Philadelphia-based privately company that has a strong presence in the dairy and beverage categories as well as being known for its vanilla expertise.

The transaction is expected to add approximately $85 million in revenue in 2017.

“This bolt-on acquisition of David Michael is another important milestone in IFF’s Vision 2020 business strategy, helping us to win where we compete in the world’s largest flavors market as we look to further accelerate growth,” said IFF Chairman and CEO Andreas Fibig. “IFF and David Michael share a strong commitment to innovation, rich histories, and a passion for our customers, making them a great addition to our organization.”

In August, IFF also reported an 11 percent increase in net income to US$117 million in the quarter, driven by volume growth and cost cutting across its flavors division.

David Michael and IFF will operate as separate companies until the transaction closes, which is expected in the fourth quarter of 2016. Its completion will be subject to regulatory authority clearances.

Matthias Haeni, group president, flavors added, “For three generations, David Michael has been a vital player in the industry, building an outstanding portfolio of capabilities and customer relationships. Merging and leveraging the strengths of both IFF-Ottens Flavors, acquired in 2015, and David Michael, we look to further reinforce our differentiated service model in the US for middle-market customers, focused on innovation, agility, and enhanced collaboration. The unique go-to-market platform is fueled by technologies that spark the senses and transform the everyday. We look forward to welcoming David Michael into the IFF family.”

CEO, Andreas Fibig told FoodIngredientsFirst: “We believe that acquiring David Michael will support our Vision 2020 business strategy by solidifying our #2 Flavors market share position in North America -- the largest flavor market globally and our home market; complement our acquisition of Ottens Flavors in terms of capabilities and customer portfolio; bolster our ability to serve mid-market customers; and provide greater expertise in vanilla, dairy, and beverage.”

“Combining the global reach and R&D tool-chest of IFF with the speed, agility, and innovation of David Michael will support the faster development of innovative solutions for mid-tier customers. And, as mentioned earlier, the addition of David Michael to our portfolio gives us a meaningful position in the world's most beloved flavor tonality, vanilla,” he adds.

For Fibig: “In our Vision 2020 business strategy, we targeted $500m-$1B in incremental sales through M&A. David Michael builds on the acquisitions of Lucas Meyer Cosmetics and Ottens Flavors, who, in 1.5 years, have already added $200m. As opportunities present themselves, we will evaluate for strategic fit, as well as their fit from financial, customer, and shareholder perspectives. All our efforts and investments are the logical consequence of the longer-term strategy outlined in Vision 2020.”

In an earlier interview with FoodIngredientsFirst, Fibig spoke about the importance of natural sourcing for IFF and how sustainability is a key point for differentiation in the flavors sector, as well as research & development expansions, a focus on collaborations and new areas of innovation for IFF including its flavor modulation for sweetness.

“One of our pillars is to really become a partner of choice for our customers. Right now the supply chain is becoming much more of a visible topic for many of them. Our customers are really looking into how their suppliers manufacture and produce their goods, and how they source their raw materials as well; what is their water consumption, what is their carbon footprint?”

“So for us it is the right thing to bring it completely into our business strategy, as it helps us with our core list of big customers. But ultimately it is the right thing to do as well,” he said.