US-headquartered ingredients provider IFF has entered into a definitive agreement to sell its Food Ingredients business unit to funds advised by private equity firm CVC Capital Partners.
The transaction values the business division at approximately $4.3 billion, representing an enterprise value-to-EBITDA multiple of roughly 10x. Under the terms of the agreement, IFF will retain an approximate 10% minority equity interest in the business, valued at around $200 million, and will hold a seat on the new company’s board of directors.
The divestment represents a significant phase in IFF's long-term portfolio simplification strategy. By divesting the food ingredients division, the multinational aims to concentrate its operational resources and research budgets on its core innovation-led business units.
The transaction has been approved by the boards of directors of both companies and is expected to close by the end of the second quarter of 2027, subject to customary regulatory approvals and information consultation requirements.
Financial Terms and Allocation
Upon the completion of the transaction, IFF expects to receive approximately $3.8 billion in net cash proceeds. This figure accounts for the rolled-over 10% equity stake, transaction taxes, customary purchase price adjustments, and the operational costs required to separate and carve out the business unit.
The company has outlined three primary capital allocation priorities for the net cash proceeds:
Debt Reduction: Prioritising debt repayment to accelerate corporate deleveraging and reinforce the balance sheet.
Share Repurchases: Executing targeted share buyback programmes as authorised by the board of directors.
Core Reinvestment: Directing capital toward high-return growth opportunities across its remaining core portfolio.
While the divestment is projected to be dilutive to IFF’s adjusted earnings per share (EPS) during the first 12 months following the close of the transaction, the company has implemented an overhead reduction plan to address the stranded costs associated with the carve-out.
Furthermore, IFF has reiterated its previously issued full-year financial guidance for 2026, forecasting sales of $10.5 billion to $10.8 billion and an adjusted operating EBITDA between $2.05 billion and $2.15 billion.
Divested Business Profile and Portfolio Performance
The divested Food Ingredients division is a global supplier of texturants, emulsifiers, plant-based systems, and speciality ingredients for multinational food and beverage processors.
In the fiscal year 2025, the business unit generated approximately $3.1 billion in annual sales and reported an EBITDA of approximately $430 million.
Under CVC Capital Partners' ownership, the business is expected to leverage its global reach and proprietary technical capabilities to capture demand in the food processing sector, particularly within the growing clean-label and natural ingredient segments.
The transaction marks IFF's 13th divestment of a non-core business unit over the past several years. Collectively, these divestments have generated nearly $10 billion in gross proceeds to support balance sheet restructuring and business reinvestment.
Post-Transaction Corporate Structure and Guidance
Following the completion of the sale, IFF will consolidate its operations around three core, science-led business segments:
Taste: Providing technology-enabled flavour formulations and solutions for global food and beverage manufacturers.
Scent: Focusing on fine fragrances, ingredients, and consumer fragrance compounds for personal care and home care brands.
Health and Biosciences: Developing innovation-led biotechnology formulations, including probiotics, enzymes, cultures, and active health ingredients.
According to IFF Chief Executive Officer Erik Fyrwald, simplifying the corporate portfolio allows the multinational to integrate its biotechnology and natural ingredients capabilities more effectively.
Over the long term, under normalised market conditions, the restructured IFF expects to target mid-single-digit revenue growth and high-single-digit adjusted EBITDA growth, driven by the higher-margin profiles of its remaining divisions.
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