IFF to sell Food Ingredients unit to CVC

International Flavors & Fragrances (IFF) has reached an agreement to sell its Food Ingredients business to funds managed by CVC Capital Partners for approximately $4.3 billion. The companies described the transaction as a significant portfolio move for IFF, separating a large food-focused operation from its remaining activities.

The sale values the Food Ingredients division at an enterprise-value to EBITDA multiple of about 10 times, based on the unit’s recent earnings performance. The agreement includes customary terms and is subject to required regulatory approvals and closing conditions.

IFF and CVC expect the transaction to close by the end of the second quarter of 2027, assuming those conditions are satisfied. Until closing, IFF will continue to operate the business as part of its consolidated operations.

IFF’s Food Ingredients business generated nearly $3.1 billion in revenue and about $430 million of EBITDA in 2025. These figures underpin the roughly 10x enterprise-value to EBITDA valuation that CVC is paying for the unit.

The business includes a portfolio of ingredients used across food applications and has been a major contributor to IFF’s overall scale. Despite its size, IFF is choosing to focus its future strategy on other areas it considers core and higher growth.

Under the agreement, IFF will retain an approximately 10% minority equity interest in the divested Food Ingredients business. This stake is valued at roughly $200 million at the time of the deal announcement.

IFF will also maintain a board seat at the carved-out company, preserving governance influence and ongoing visibility into its performance. The minority holding allows IFF to participate in any future value creation at the standalone business.

IFF expects to receive about $3.8 billion in net cash proceeds from the transaction, after accounting for its retained stake and associated costs. Management outlined several planned uses for this capital.

The company intends to prioritize debt reduction, support share repurchases and invest in what it describes as core, higher-growth segments. These capital allocation plans are aimed at reshaping the company’s balance sheet and portfolio after the sale closes.

IFF reaffirmed its 2026 outlook, projecting sales between $10.5 billion and $10.8 billion and adjusted EBITDA of $2.05 billion to $2.15 billion. The company presented this guidance alongside the divestiture announcement.

Management cautioned that the Food Ingredients sale is expected to be dilutive to adjusted earnings per share in the first 12 months after closing, reflecting the loss of earnings from the divested unit. Despite this anticipated EPS impact, investors reacted positively to the news.

Following the announcement of the agreement with CVC, IFF shares traded higher in pre-market activity. The market response indicated investor focus on the valuation achieved, the planned use of proceeds and the company’s reaffirmed financial targets.