International Flavors & Fragrances Inc.
- Company Name
- International Flavors & Fragrances Inc.
- Stock Symbol
- Class Period
- May 7, 2018 to August 5, 2019
- Motion Deadline
- October 11, 2019
- Southern District of New York
The complaint charges International Flavors & Fragrances Inc. (“IFF”) and certain of its officers with violations of the Securities Exchange Act of 1934. IFF describes itself as an “innovator of sensory experiences,” creating products that consumers taste, smell, or touch. The Company acquired Frutarom Industries Ltd. (“Frutarom”), an Israeli-based company that specializes in the production and distribution of extracts for flavor and fragrance, in October 2018 for $7.1 billion.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose that: (1) IFF had not completed adequate due diligence before acquiring Frutarom; (2) Frutarom had made improper payments to customers in Russia and Ukraine; (2) senior officers at Frutarom were aware of such improper payments; (3) as a result of these improper payments, Frutarom’s financial results were materially overstated; and (4) IFF was reasonably likely to face increased regulatory scrutiny due to Frutarom’s improper payments. As a result of this information being withheld from the market, IFF securities traded at artificially inflated prices during the Class Period, with the price of IFF stock reaching a high of more than $150 per share.
Then on August 5, 2019, after the market closed, the Company disclosed that Frutarom had “made improper payments to representatives of a number of customers” in Russia and Ukraine and that “key members of Frutarom’s senior management at the time were aware of such payments.” The Company also reduced its 2019 sales guidance to a range of $5.15 billion to $5.25 billion from a range of $5.2 billion to $5.3 billion, and adjusted earnings per share guidance to a range of $4.85 to $5.05 from a range of $4.90 to $5.10. On this news, the Company’s share price fell $22.56 per share, or nearly 16%, to close at $118.91 per share on August 6, 2019.