International Flavors & Fragrances has announced that is has entered into a definitive agreement to acquire Frutarom in a cash and stock transaction valued at US$7.1 billion.

The acquisition will propel IFF to the position of global leader in taste, scent and nutrition as the two industry-leading companies combine.

“This transaction is a big win and a fantastic outcome for shareholders, customers and employees of both companies,” said IFF Chairman and CEO Andreas Fibig in a statement. “Frutarom has an extremely attractive product portfolio, including broad expertise in naturals and diverse adjacencies with capabilities beyond our core taste and scent business. It also has significant exposure to complementary and fast-growing small- and mid-sized customers. By combining our deep R&D expertise with Frutarom’s, we are offering our customers a broader range of solutions and accelerating our growth strategy. We believe this combination will lead to faster and more profitable growth, enhanced free cash flow and generate greater returns for our shareholders.”

“This transaction represents a major milestone for Frutarom and opens the door to a new chapter of growth and shareholder value creation,” said John Farber, Frutarom Chairman of the Board and Chairman of ICC Industries Inc., Frutarom’s largest shareholder. “I am pleased to support this historic combination of two world-class companies and look forward to the next chapter of the IFF and Frutarom story.”

Following the completion of the transaction, IFF is expected to benefit from enhanced top line growth rates and a strong EBITDA margin. The two companies are expected to realize approx.. US$145 million of cost synergies by year three post closing. Ori Yehudai, President and CEO of Frutarom will serve as a strategic advisor, supporting Fibig. The company will maintain a presence in Israel and remain headquartered in New York.