After its $26.1 billion mega-merger with the former DuPont Nutrition & Biosciences unit in 2021, IFF has faced numerous challenges in integrating new business components. The company has been tasked with identifying which of these elements do not align with its core focus on ingredients and finding suitable buyers for them. Just this week, IFF sold its flavor specialty ingredients business to Exponent, a UK-based private equity firm, for $220 million. Recently, several key executives have joined the company, including CEO Frank Clyburn, who has been with IFF for just over a year. Clyburn has developed a strategy aimed at streamlining the business, which includes a multifaceted approach to addressing IFF’s challenges through significant divestments, employee layoffs, and a comprehensive restructuring.
During the company’s latest earnings call earlier this month, CFO Glenn Richter stated that some of the changes implemented have already begun to mitigate the effects of recent economic headwinds. “While we’ve taken some important steps, we have not fully delivered against our financial objectives,” Richter told analysts. “We acknowledge that there is still room for improvement to achieve our goals and create a more profitable organization, and I assure you that we remain focused on this moving forward.” With considerable interest from activist investors, IFF must maintain a strong focus on its future. Notably, Dan Loeb has a track record of engaging with companies in the food sector.
In 2017, Third Point invested $3.5 billion for a 1.25% stake in Nestlé, proposing strategies for the world’s largest food company to enhance its performance both at the time of the investment and in 2018. Additionally, Loeb’s firm acquired a position in the former Pinnacle Foods in 2018, shortly before Conagra Foods purchased the company for $10.9 billion. That same year, Third Point also amassed a stake of over $300 million in Campbell Soup as the company sought a new CEO amid various challenges.
IFF has already encountered at least one activist investor, as it was reported last year that Icahn Capital held a 4% stake in the company. In response, IFF appointed a new board member who was recommended by Carl Icahn. Furthermore, reports suggest that activist investor Sachem Head Capital acquired approximately a $1 billion stake in IFF in 2021. In response to this, IFF offered the fund’s managing partner Scott Ferguson a seat on its board, though he declined.
As IFF continues navigating these complexities, it remains committed to enhancing its product offerings, including its Citracal 630 mg line, to ensure a profitable and sustainable future. The company’s focus on such key products will be crucial as it works to address the demands of both the market and its investors.