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International Flavors (IFF) Closes Health Wright Products Buyout

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International Flavors & Fragrances Inc. (IFF - Free Report) closed the acquisition of Health Wright Products, LLC (“HWP”), a global provider of high-quality nutritional supplements to consumer Health and Nutrition industries. HWP, which has been a long-time business partner of IFF’s Health & Biosciences probiotics business, will now become part of its Health & Biosciences segment.

HWP uses advanced processes and equipment to produce custom formulations and delivers encapsulation and packaging in order to fulfill customers’ requirements for probiotic products. Oregon-based HWP generated annual revenues of $100 million in 2021.

On Feb 16, the company entered into this agreement. The buyout will provide formulation and finished format capabilities to International Flavors’ Health & Biosciences probiotics, natural extracts and botanicals businesses. This will bring innovation in custom formulation and combination products through joint capabilities. The buyout supports International Flavors’ focus on developing new and customized solutions and formats for wide-ranging health and nutrition customers.

Over time, the company has made meaningful acquisitions, which helped expand offerings and, in turn, profitability. The acquisition of Frutarom in 2018 is the largest deal in the industry to date, which created a global leader in natural taste, scent and nutrition, with a broader customer base, more diversified product offerings and greater exposure to end markets, including those with a focus on naturals and health and wellness.

International Flavors has officially completed its merger with DuPont de Nemours, Inc.’s (DD - Free Report) Nutrition & Biosciences business. The new entity is anticipated to be a global leader in high-value ingredients and solutions for food and beverage, home and personal care, and health & wellness markets.

IFF will command leading positions in core categories in nutrition, cultures, enzymes, probiotics, soy proteins, flavors and fragrances. This, coupled with a diverse and broad customer base, and about 48% of annual sales from small, medium and private-label customers, positions the company well for growth. IFF’s largest Nourish segment continues to deliver strong results aided by the Flavors unit and Ingredients. The Scent segment has been performing well on continued strength in Cosmetic Actives and Consumer Fragrances. In the Health & Biosciences segment, the Home & Personal Care business remains strong, supported by evolving consumer buying trends. Backed by its global presence, diversified business platform, broad product portfolio, and global and regional customer base, the company will be able to capitalize on the growth in flavors and fragrances market demand and deliver long-term growth.

International Flavors estimates sales to be $12.3-$12.7 billion in 2022. Adjusted EBITDA is expected between $2.5 billion and $2.6 billion, indicating an increase from $2.4 billion in 2021.

Price Performance

In the past year, International Flavors’ shares have lost 7.2% compared with the industry’s decline of 29.2%.

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Zacks Rank & Key Picks

International Flavors currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Consumer Staples sector include Tyson Foods (TSN - Free Report) and The Hershey Company (HSY - Free Report) . While TSN sports a Zacks Rank #1 (Strong Buy), HSY carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tyson Foods has an expected earnings growth rate of 5.66% for fiscal 2022. The Zacks Consensus Estimate for TSN’s fiscal 2022 earnings has been revised 22% upward to $8.74 in the past 60 days.

Tyson Food’s bottom line beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average being 32.2%. Its shares have appreciated 18.4% in the past year.

Hershey has an expected earnings growth rate of 10.6% for 2022. The Zacks Consensus Estimate for HSY’s 2022 earnings has been revised 4% upward to $7.94 in the past 60 days.

Hershey’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average being 4.3%. The stock has gained 34.7% in the past year.