US-based International Flavours and Fragrances (IFF) has purchased Israeli natural ingredients company Frutarom in a cash and stock transaction worth $7.1bn.

The acquisition has been approved unanimously by the boards of directors of both companies. In accordance with the agreement, Frutarom’s shareholders will receive $71.19 in cash and 0.249 of a share per share in IFF common stock. This represents a total value of $106.25 per share based on the ten-day volume weighted average price for IFF’s common stock.

By integrating Frutarom into IFF, the latter is fulfilling its Vision 2020 strategy to become a global leader in taste, scent and nutrition.

The two companies are flavour industry leaders. Frutarom markets and sells 700,000 products to more than 30,000 customers in more than 150 countries with production centres on six continents. Its focus is on natural products, which IFF claims drives more than 75% of its sales.

IFF serves 162 countries with its 46,000 products in three major categories: taste, touch and smell.

IFF chairman and CEO Andreas Fibig said: “This transaction is a big win and a fantastic outcome for shareholders, customers and employees of both companies.

“Frutarom has an extremely attractive product portfolio, including broad expertise in naturals and diverse adjacencies with capabilities beyond our core taste and scent businesses. It also has significant exposure to complementary and fast-growing small and mid-sized customers. We believe this combination will lead to faster and more profitable growth, enhanced free cash flow and generate greater returns for our shareholders.”

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Frutarom president and CEO Ori Yehudai said: “Today, we are extremely excited to combine Frutarom with IFF and together create global leadership in natural taste, scent and nutrition. The growth potential for the combined company is substantial and our shareholders will continue to enjoy this upside.”

The combining of the two companies is expected to achieve approximately $145m in run-rate cost synergies by the third full year.