US-based International Flavors & Fragrances (IFF) has agreed to acquire Israeli-based firm Frutarom in a cash and stock transaction valued at nearly $7.1bn, which also includes the assumption of Frutarom’s net debt.

Frutarom produces and distributes flavours, savoury solutions, and natural ingredients to more than 150 countries worldwide.

Under the deal, Frutarom’s shareholders will receive $71.19 in cash and 0.249 of a share of IFF common stock for each Frutarom share.

By acquiring Frutarom, IFF intends to accelerate its Vision 2020 strategy to become a global leader in taste, scent, and nutrition.

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.

"The combination of the two companies is expected to broaden the complementary customer base, capabilities, geographic reach, and will see an expansion of the product portfolios."

“By combining our deep R&D expertise with Frutarom’s, we are offering our customers a broader range of solutions and accelerating our growth strategy. We believe this combination will lead to faster and more profitable growth, enhanced free cash flow and generate greater returns for our shareholders.”

The combination of two companies is expected to broaden the complementary customer base, capabilities, geographic reach, and will also see an expansion of the product portfolios.

Completion of the transaction is expected to take place over the next six to nine months after obtaining approval from Frutarom shareholders, as well as from the relevant regulatory authorities.

Frutarom president and CEO Ori Yehudai: “Frutarom has had a fascinating journey of accelerated growth, far above our industry benchmarks through our investment in unique technologies and focuses on natural products in the growing world of health and taste.

“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.”

Upon completion, IFF will continue to be headquartered in New York City, while maintaining its presence in Israel.