DuPont and flavors and fragrances maker IFF have reached a deal under which IFF will merge into DuPont’s nutrition and biosciences unit in a $26.2 billion deal to create a new company valued at more than $45 billion.

Under the terms of the agreement, DuPont shareholders would own 55.4% and IFF shareholders would own 44.6% of the new company. DuPont would receive a $7.3 billion cash payment.

The company’s statement said the combination would create a global leader in the food and beverage; home and personal care; and health and wellness markets. The new entity would have an estimated 2019 pro forma revenue of more than $11 billion and EBITDA of $2.6 billion, excluding synergies.

It expects to generate synergies of approximately $300 million by the end of the third year after closing and is targeting more than $400 million in run-rate revenue synergies, resulting in more than $175 million of EBITDA.

Meat alternatives are an area that could benefit from the new company’s research and development division. DuPont creates the plant-based proteins that are used in meatless alternatives; IFF, formerly known as International Flavors & Fragrances, creates the flavors and colors.

“We conducted a very thorough process leading us to the selection of IFF as the preferred strategic partner for N&B. I am excited about the future of the new company and all the opportunities it has for long-term value creation,” DuPont executive chairman Ed Breen said.

IFF beat out competition from Irish dairy producer Kerry Group, which was also in negotiations with DuPont for the nutrition and biosciences unit.

The deal is structured as a reverse morris trust transaction and is expected to be tax-free to DuPont and its shareholders for U.S. federal income tax purposes, the companies said.

Upon closing, the board of the new company will have 13 directors, with seven from IFF and six from DuPont until the annual meeting in 2022, when there will be six directors from each company.

Andreas Fibig will continue as chairman of the board and chief executive officer of IFF. Breen will serve as a DuPont appointee and become lead independent director, effective June 1, 2021.

The company will be based in New York.

PATRICK KOVARIK/AFP via Getty Images

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