DuPont announced this week that it has signed a definitive agreement to merge its food and nutrition business into International Flavors & Fragrances (IFF). The Reverse Morris Trust transaction will be tax-free to DuPont and its shareholders.

New York-based IFF reportedly beat out Irish food giant Kerry Group to win the bid. Dutch chemical and life sciences company DSM also had been seen as interested.

DuPont and IFF said the merger will create a global market leader in high-value ingredients and solutions for global Food & Beverage, Home & Personal Care and Health & Wellness markets with sales of $45.4 billion and an EBITDA margin of 23%.

Under the terms of the deal, which values the DuPont Nutrition & Bioscience unit at $26.2 billion, shareholders of the Wilmington, Delaware-headquartered chemicals and agriculture group will hold 55.4% of the new consumer product specialist with combined annual sales of more than $11 billion. IFF shareholders will own 44.6%.

DuPont will receive a one-off special cash payment of $7.3 billion.  Closing of the transaction, which is still subject to approval by regulators and IFF shareholders, is envisioned by early 2021.

The new company will be based in New York, with IFF’s current CEO Andreas Fibig serving as chairman and chief executive. DuPont’s executive chairman, Ed Breen, will initially join the board as a DuPont-appointed director and will serve as Lead Independent Director from Jun. 1, 2021.

With the combination of the two portfolios, which are said to be complementary, the new muscle-bound market player will likely have the number one or two positions in the Taste, Texture, Scent, Nutrition, Cultures, Enzymes, Soy Proteins and Probiotics categories.

The merged company will have double the research and development of any of its rivals, Breen commented.

The proposed combination also has a rationalization component. In a joint statement, the companies said they project cost synergies of about $300 million within three years of closing, along with $400 million in revenue synergies. This, they noted, would result in EBITDA of $175 million.