International Flavors & Fragrances to sell pharma solutions unit to Roquette in $2.8bn deal

In a strategic move poised to reshape its business landscape, International Flavors & Fragrances Inc (IFF) has announced a definitive agreement to divest its Pharma Solutions division to Roquette, a French powerhouse in plant-based ingredients. The deal, valued at an impressive enterprise value of up to $2.85 billion, benchmarks an enterprise value to EBITDA multiple of approximately 13x. This transaction is not just a business exchange but a pivotal moment for both entities involved.

The Pharma Solutions business, renowned for its development and manufacture of pharmaceutical excipients, encompasses the Global Specialty Solutions arm that caters to both industrial and methyl cellulose food applications. The divestiture includes businesses primarily within IFF’s existing Pharma Solutions division, fine-tuned to better align with customer needs, business operations, and manufacturing footprints.

Erik Fyrwald, CEO of IFF, expressed confidence in the agreement with Roquette, highlighting it as a critical juncture for the Pharma Solutions’ future growth trajectory and a testament to IFF’s strategic portfolio optimization. This divestiture is part of a broader initiative aimed at reducing debt leverage to below 3.0x, refocusing on core growth drivers, and thereby maximizing shareholder value. Fyrwald also acknowledged the significant contributions of the Pharma Solutions team, anticipating further industry leadership and innovation post-transition to Roquette.

On the other side, Roquette’s CEO, Pierre Courduroux, shared the enthusiasm for the partnership, foreseeing it as an opportunity to cement a global leadership position in drug delivery and oral dosage solutions. This acquisition is set to enhance Roquette’s offerings, meeting the evolving demands of pharmaceutical manufacturers and patients alike.

The Pharma Solutions sector, with its global footprint of 10 R&D and production sites and a workforce of approximately 1,100 employees, reported a revenue of around $1 billion in 2023. Both IFF and Roquette aim to finalize the transaction in the first half of 2025, pending regulatory approvals and customary closing conditions.

The financial and legal advisories for the deal included J.P. Morgan Securities LLC for IFF and Skadden, Arps, Slate, Meagher & Flom LLP alongside Evercore for board counsel and advisory, respectively.

This deal marks a significant milestone for International Flavors & Fragrances Inc and Roquette, each stepping into a new chapter of growth and innovation. As these companies embark on their respective journeys, the industry awaits the unfolding of this partnership’s potential to revolutionize pharmaceutical solutions globally.