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International Flavors & Fragrances Inc. (IFF - Analyst Report) arrived at a major tax settlement with the Spanish authorities that put an end to all disputes related to the company’s Spanish subsidiaries income tax deductions related to the 2004-2010 period.

The settlement reached between the two parties requires International Flavors to pay approximately Euro 86.0 million (or US$105.7 million) to the Spanish authorities by 2012 end. This will impact the payee’s financial results for the third quarter 2012 to the tune of $58.5 million or 71 cents per share.

Additionally, the two parties will also decide upon 2012 and future years’ guidelines/principles to be followed by International Flavors to carry on its businesses in Spain.

The two parties are also involved in a similar dispute related to tax deductions for 2002 and 2003 years. For this, the company will record an additional $13.9 million or 17 cents per share accrual in the third quarter 2012.

The company is slated to release its second quarter 2012 results on August 8, 2012. The Zacks Consensus Estimate for the period stands at $1.02 per share, representing a 5.45% year-over -year increase. Estimates for 2012 and 2013 stand at $3.98 and $4.33 per share, representing 6.51% and 8.76%, respectively.

International Flavors & Fragrances is one of the leading companies engaged in the creation and manufacturing of fragrance and flavoring products in the United States and internationally. We believe that the company’s success will be driven by its substantial geographical presence and product mix.

We currently maintain a neutral recommendation on the stock. It also bears a Zacks #4 (Sell) rating.

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