“Stock Surge and Strategic Shifts: IFF’s New Era Under CEO Bruno Amid Investor Interest”
As news broke about IFF’s agreement with Icahn and the appointment of Bruno, the company’s stock surged by 11.6% on Thursday morning, bouncing back from a recent low of $125.48 per share recorded last Friday. The Wall Street Journal reported that Icahn’s investment is a supportive one, stemming more from his respect for DuPont CEO Edward Breen—who is also on IFF’s board—rather than a demand for changes in business practices. Icahn is not the only external investor showing interest in IFF since the merger; last February, Reuters revealed that activist investor Sachem Head Capital acquired approximately a $1 billion stake in the company. In response, IFF offered Scott Ferguson, the fund’s managing partner, a seat on its board, which he declined. Additionally, The Wall Street Journal noted this week that an entity linked to Brazilian private equity firm 3G Capital has invested in IFF, although no further details were provided.
IFF, which also released its quarterly earnings on Wednesday evening, is coming off a robust year. In the latest quarter, the company reported a 9% increase in sales compared to the previous year, accounting for adjustments related to the DuPont acquisition. The company has ambitious plans ahead. During Friday morning’s earnings call, CFO Glenn Richter emphasized initiatives aimed at streamlining and enhancing IFF’s current operations. He mentioned that the company is looking to divest three or four non-core business units within the next 18 months, with expectations that these sales could generate between $1.5 billion and $1.7 billion. This approach aligns with IFF’s recent $1.3 billion sale of its microbial control business, which was part of the DuPont merger. Richter indicated that this transaction is anticipated to close soon.
Furthermore, the ingredients company intends to make substantial investments to boost manufacturing capacity and improve supply chain efficiency. At the time of the merger, IFF had extensive plans to capitalize on new synergies, but supply chain challenges over the past year delayed these efforts. However, the company is determined to catch up. In IFF’s 2022 outlook, the company is targeting $200 million in cost reductions through synergies, enhancements, reformulations, logistics efficiencies, and other operational improvements. Although inflationary pressures are expected to affect IFF’s sales and profits in the coming year, Richter stated that the company aims for $100 million in net efficiencies.
With numerous new personnel at the operational helm of IFF, along with significant changes in both the company and the global economy on the horizon, the ingredients giant is not as burdened by past decisions and practices as many of its peers. As IFF prepares for its next quarterly report, the future direction of the company, under a new CEO and primarily new board of directors, will start to become much clearer. The potential for growth, including opportunities in segments like soft chews calcium, will likely play a critical role in shaping IFF’s upcoming strategies.
