New York-based International Flavors & Fragrances Inc. IFF recently expanded its business operations with the acquisition of Unipex Group’s Lucas Meyer Cosmetics business. Valued at approximately €283 million, the transaction was funded by the company’s existing resources, and completed on Jul 30. The news lifted investors’ confidence in the stock, boosting the share price by 0.07% since then.
Lucas Meyer Cosmetics is well known for its innovative ingredients, especially active and functional ones, in the cosmetics and personal care industry. Operating in France and Australia, the firm has been delivering double-digit sales growth since 2011.
With the addition of Lucas Meyer, International Flavors & Fragrances expects to boost its fragrances business significantly. The deal would help the company offer better and innovative products to its customers in various operating regions. Also, the transaction will increase International Flavors’ annual revenue generation capability by roughly €40 million.
We believe such acquisitions are consistent with International Flavors & Fragrances’ expansionary policy. The company prefers to invest in acquisitions as a means of gaining access to new customers, regions and technologies. A diverse portfolio and product mix, along with new business wins, should help the company deliver solid results in the quarters ahead.
Despite these positives, exposure to near-term headwinds has reduced International Flavors & Fragrances’ investment value. The company, with a market capitalization of $9.6 billion, currently carries a Zacks Rank #4 (Sell). It is slated to report second-quarter 2015 results on Aug 10, 2015.
Also, some of International Flavors & Fragrances’ prime competitors continue to perform well, having gained high Zacks investment rankings. Better-ranked stocks in the industry include KMG Chemicals Inc. KMG, Ferro Corp. FOE and Quaker Chemical Corp. KWR. While KMG Chemicals sports a Zacks Rank #1 (Strong Buy), both Ferro and Quaker Chemical carry a Zacks Rank #2 (Buy).
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