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International Flavors Completes Acquisition of David Michael


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New York-based International Flavors & Fragrances Inc. (IFF - Analyst Report) recently announced that it has successfully completed the acquisition of Philadelphia, PA-based David Michael & Company, Incorporated. Financial terms of the deal were not disclosed.

As revealed, David Michael & Company, a privately held flavors company, is recognized for its product line in the dairy and beverages industries. Among many products, the firm’s vanilla-based flavors deserve a special mention.

International Flavors & Fragrances, as disclosed earlier, funded the transaction through its existing resources.

With the addition of David Michael & Company, International Flavors & Fragrances expects to boost its flavors business in the fast-growing middle-markets of North America. In addition to complimenting the company’s IFF-Ottens Flavors business, the acquired assets will likely generate incremental revenue of $85 million in 2017.

We believe such acquisitions are consistent with International Flavors & Fragrances’ expansionary policy and its Vision 2020 business strategy. The company prefers to invest in acquisitions as a means to gain access to new customers, regions and technologies. A diverse portfolio and product mix, along with new business wins, should help International Flavors & Fragrances deliver solid results in the quarters ahead.

Despite these positives, exposure to near-term headwinds has limited International Flavors & Fragrances’ growth momentum. The company, with a market capitalization of $10.8 billion, currently carries a Zacks Rank #3 (Hold).

Also, some of International Flavors & Fragrances’ prime competitors continue to perform well, having gained high Zacks rankings. Better-ranked stocks in the industry include Green Plains Inc. (GPRE - Snapshot Report) , NL Industries Inc. (NL - Snapshot Report) and Chemtura Corporation (CHMT - Snapshot Report) . While both Green Plains and NL Industries sport a Zacks Rank #1 (Strong Buy), Chemtura Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Green Plains Inc. has witnessed upward earnings estimate revisions for 2016 and 2017 over the past 60 days.

NL Industries Inc. reported better-than-expected results in the last two quarters. Also, the company’s bottom-line estimates have improved for 2016 and 2017 over the past 60 days.

Chemtura Corporation’s earnings track record is impressive, with an average positive earnings surprise of 4.68% for the last four quarters. Also, the company has witnessed positive revisions in earnings estimates for 2016 and 2017 over the last 60 days.

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