08:33 AM EDT, 03/19/2024 (MT Newswires) -- International Flavors & Fragrances ( IFF ) said Tuesday it is selling its Pharma Solutions segment to French food ingredient company Roquette in a deal with a $2.85 billion enterprise value.

The move will help IFF's bid to cut its debt leverage to 3.0x or below, Chief Executive Erik Fyrwald said in a statement. "This also enables us to increase focus on the core drivers of long-term profitable growth and maximize value for our shareholders," he added.

Net debt to credit-adjusted earnings before interest, tax, depreciation and amortization was 4.5x by the end of the fourth quarter, the company said last month. In February, IFF cut its quarterly dividend by about 50% to $0.40 a share as part of its moves to reduce debt and strengthen its capital structure.

IFF, which has a $21 billion market capitalization, rose 1.1% in pre-bell activity Tuesday. The stock has nudged up 3.5% this year.

Pharma Solutions works in drug development with ingredients like excipients, which bind together the contents of a medication. It's the smallest revenue earner of IFF's four business segments, falling 3% annually in 2023 to $945 million, it said in February. Adjusted operating EBITDA for the segment dropped 10% as lower volumes dented any benefit from higher prices and better productivity, IFF said.

"The combination of our excipients expertise with IFF Pharma is a fantastic opportunity to become a true global specialist of drug delivery and oral dosage solutions," Roquette CEO Pierre Courduroux said in the statement.

The deal is expected to close in the first half of next year. Pharma Solutions has about 1,100 global employees and 10 locations. IFF said the business being sold is mostly made up of its existing Pharma Solutions division, but includes "some adjustments to the perimeter of the transaction designed to align customers, businesses and the manufacturing footprint." It didn't give details.

In October, IFF sold its cosmetics ingredients business unit to chemical company Clariant for $810 million. A week later, IFF said it was continuing a cooperation agreement with activist investor Icahn Capital including the re-nomination of an Ichan director to the board and another one who would be "mutually agreed." Fyrwald was named CEO in January, replacing Frank Clyburn who held the job for about two years.

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