DuPont's Nutrition Unit Is Prized by International Flavors and Kerry Group

International Flavors & Fragrances is battling it out with Ireland's Kerry Group for the chance to be part of a $25 billion spinout by DuPont of its nutrition unit.
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The outbreak of a bidding war for DuPont’s  (DD) - Get Report multibillion-dollar nutrition unit helped drive up the stock price on Monday of the chemical and industrial giant.

Shares of DuPont jumped 1.28% to $64.60 a share on the heels of a Bloomberg report that International Flavors & Fragrances (IFF) - Get Report was now also pursuing a deal for the $25 billion unit.

IFF’s move presents a challenge to Ireland’s Kerry Group (KRYAY) , which has been considered the leading contender for the deal since DuPont began weighing a potential sale of its nutrition division in August. A big player in the dairy industry, Kerry is hoping a deal for the DuPont unit will help the company expand into the food ingredients business.

For IFF, which makes fragrances and flavors for use in everything from food to household and personal care products, the DuPont unit would round out its offerings while also broadening its customer base.

A winning bidder could emerge by the end of the year, though the transaction, which involves a complicated Reverse Morris Trust, could take more than a year to complete, Bloomberg reported, citing people with knowledge of the discussions.

In particular, DuPont is proposing to combine its nutrition unit with the bidder’s assets to form a new company. The new company, in turn, would be spun off to existing DuPont investors and shareholders.

The board of the new company would be stocked with members chosen by DuPont and the winning bidder, Bloomberg reported.

However, investors in both IFF and Kerry were skittish Monday, pushing down the stock price of IFF and the Kerry Group amid news of what could be a very expensive bidding contest.

Shares of IFF fell 4.96% to $135 a share, while Kerry’s stock price dropped 1.9% to $129.01.