International Flavors & Fragrances Inc. (NYSE: IFF)

International Flavors & Fragrances Inc. reported positive first quarter results which were above analyst expectations on before the bell on Monday. The company reported a 12% increase in revenue, triggering its shares to surge by 7% during the morning hours. The New-York based firm also announced it would acquire Israel flavor maker, Frutarom Industries Ltd in a deal valued at around 7.1 billion.

The acquisition of Frutarom is aimed at enabling IFF to tap into the rapid-growing market of natural food ingredients. Under the terms of the deal, Frutarom investors will receive $71.19 in cash for each share and 0.249 of a share of IFF.  The deal has been unanimously approved by both boards and is set to be largest deal in the food flavoring industry.

The companies are set to close the deal in around six to nine months and both will have an estimated combined revenue of $5.3 billion. Frutarom Chief Executive Ori Yehudai will be a strategic adviser to IFF Chief Executive Andreas Fibig. Bank of America is serving as the financial adviser to Frutarom, while Morgan Stanley and Greenhill & Co. are advising IFF.

IFF Earnings & Outlook

During the quarter, International Flavors and Fragrances reported adjusted earnings per share of $1.69 compared to $1.52 earnings per share during the year-ago period. The $1.69 earnings per share topped the consensus estimate of $1.59.

Revenue had increased by 12% to $930.93 million from $828.29 million during the same period last year. The $930.93 million revenue surpassed analyst expectation of $910.1 million.

The firm projects adjusted earnings per share growth of between 5.5% to 7.5% and revenue growth of between 3.0% to 5.0% for the full year.

This is much more expensive than the penny stocks I like to trade but give the size of the move it should have some decent opportunities to trade today.