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Moody's cuts International Flavors & Fragrances outlook after DuPont unit deal

Moody's revised the outlook on International Flavors & Fragrances Inc., or IFF, to negative from stable, following the announcement of a $26.2 billion merger with DuPont de Nemours Inc.'s nutrition and biosciences arm.

The rating agency said the outlook reflects the significant size of the transaction, the lack of stable growth at DuPont's unit and integration risks, having previously acquired Frutarom Industries Ltd.

IFF is yet to attain the synergy target of $145 million in connection with the acquisition of Frutarom, which was completed in October 2018.

Run-rate based cost synergies are estimated at about $300 million by the end of the third year after the nutrition and biosciences unit's deal is closed, but Moody's estimated cost to attain that target at $355 million.

The proposed transaction could also increase debt levels, the rating agency said.

Meanwhile, the rating agency affirmed the company's issuer and senior unsecured regular bond/debenture ratings at Baa3, assuming the company will deleverage prior to the close of the transaction.