IFF to acquire Bush Boake Allen
The deal buttresses IFF's strong position in fragrances and catapults it into the top spot as the world's largest producer of flavors, says the company. The two companies employed 6600 people registered combined sales of $1.9 billion in 1999.
Bush Boake Allen, which conducts operations at 60 locations in 38 countries, supplies flavors and fragrances to consumer product companies. These typically go into foods, beverages, soaps and detergents, cosmetics, toiletries, personal care items, and related products. Its aroma chemicals, natural extracts, and essential oils serve as raw materials for a wide range of compounded flavors and fragrances.
IFF produces flavors and fragrances used to enhance a wide variety of consumer products. It operates facilities in more than 35 countries and had sales of $1.44 billion in 1999.
IFF also announced that third-quarter profits would plummet due to a 4% decline in sales and unfavorable exchange rates. The company says it will earn 33 c/share of common stock. Wall Street analysts had expected it to earn 48 c/share.
IFF expects the BBA transaction to prove cash accretive in 2001 and accretive to reported earnings per share in 2002. It plans to begin a tender offer for all outstanding shares of BBA common stock by October 10, 2000. International Paper Co. (New York, NY), which owns 68% of BBA, has agreed to tender its shares to IFF.
"BBA provides IFF with complementary products and an increased scale of operations in important markets," says IFF chairman/CEO Richard A. Goldstein. "Moreover, the combined company will be better able to serve our global customers.
"BBA has proven its ability to profitably grow its substantial flavors business, and its position in fragrances complements our leadership in the fragrance industry. BBA also offers a strong presence in key markets that we have targeted for growth, especially India.
"On a broader level, this transaction creates significant cost savings opportunities and a reduced cost base from which IFF can operate more efficiently. With BBA, we are better positioned for long-term growth and increased profitability."
IFF says it expects to cut costs by $35 million in 2001 and $70 million eventually. It expects to achieve these savings primarily through facilities consolidation, capacity optimization, supply chain rationalization, and reduced selling, general and administrative expenses.
Julian W. Boyden, BBA's chairman/president/CEO, will join IFF's executive management team as executive VP and will focus initially on integrating the two companies.
Edited by Alan S. Brown
Managing Editor, Chemical Online
For the latest chemical industry news, products, and technology, subscribe to Chemical Online's free biweekly e-mail update.