(Corrects in 3rd paragraph that deal is expected to close in the second quarter of 2022, not second half of 2022)
Aug 23 (Reuters) – Chemical company International Flavors & Fragrances (IFF) has signed a deal to sell its microbial control unit to German specialty chemicals maker Lanxess , with the deal being valued at $1.3 billion, the companies said.
IFF, which supplies scents and tastes for products that are household names, said on Monday the cash proceeds from the deal will be primarily used to reduce outstanding debt.
The companies added they expect the deal to close in the second quarter of 2022.
The German company said its currently suspended share buy-back program in the amount of 463 million euros ($543.89 million) will be terminated. The nearly 1.1 million repurchased shares under the program will be cancelled, it added.
Lanxess also said it has secured bridge financing for the deal, which is expected to be refinanced with senior corporate bonds.
Reuters reported last month that IFF had short-listed Lanxess and private equity-owned LSI in the sale of its microbial control unit.
IFF in 2019 agreed to merge with DuPont’s $26 billion nutrition and biosciences unit, creating a new consumer giant. This year it put the microbial control unit up for sale with the help of Bank of America as it sought to shake off some assets inherited from the DuPont deal.
The microbial control unit, a former Dow business that became part of DuPont following the two companies’ merger and subsequent split, makes biocides used in the oil and gas industry as well as for water treatment and hygiene purposes.
The microbial control unit of IFF is composed of about 270 employees with two production facilities in the U.S. and with an estimated 2021 annual revenue of about $440 million, IFF said. ($1 = 0.8513 euros)
Reporting by Kanishka Singh in Bengaluru Editing by Chris Reese