Dupont Exchange offer for IFF

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Topic Author
Oil Boiler
Posts: 3
Joined: Thu Jun 02, 2016 9:47 pm

Dupont Exchange offer for IFF

Post by Oil Boiler »

Received a package today from Dupont related to Dupont divesting it's Nutrition and Biosciences Division to International Flavors and Fragrances. I've been through stock spin offs , but never one where I've received an "exchange offer" like this. I own less than 100 shares so I'm not overly concerned with the implications , but don't understand the pros and cons here. What happens if I do nothing? Is anyone familiar with this action who could perhaps explain this in more common terms? If more details are needed , i can dig them out. Thanks!
Posts: 1
Joined: Sat Jan 16, 2021 7:46 pm

Re: Dupont Exchange offer for IFF

Post by Kulgogi »

You're likely to automatically get some shares of the new N&B spinoff (which eventually will become IFF shares) even if you do nothing. Dupont doesn't expect all 142 million shares of N&B that they're spinning off to get subscribed in the Exchange Offer. Any unsubscribed shares will get distributed pro data to all DD shareholders after the Exchange Offer. So, assuming they're right--which seems likely--the simplest and easiest thing to do is just do nothing and collect a few IFF shares 'for free' after the whole Exchange Offer process closes. The real question is whether it's worth tendering any shares of DD at all. Tendered shares will enjoy a 7% price discount. That's Dupont's inducement to encourage people to tender. But is that enough of a price discount? I can't say for sure. I think the more important question than whether the price discount is sufficient to warrant tendering is the basic question: Do you want to own shares of IFF going forward at all? IFF's business is quite different from DD's chemicals business (hence why DD is hiving this business off to IFF). IFF's business is certainly not 'sexy' and the stock hasn't done much in the past 10 years. But IFF pays a reasonable dividend, its financials appear sound, and it seems likely to continue doing so in perpetuity.
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