International Flavors & Fragrances Inc.

The Company acquired Frutarom Industries Ltd. (“Frutarom”) in October 2018 for $7.1 billion. 

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 financial guidance for sales to a range of $5.15 billion to $5.25 billion, from a range of $5.2 billion to $5.3 billion, and for adjusted earnings per share to a range of $4.85 to $5.05, from $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, on unusually heavy trading volume.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Frutarom had bribed customers in Russia and Ukraine; (2) that senior management at Frutarom were aware of such improper payments; (3) that, as a result, Frutarom’s financial results were materially overstated; (4) that, as a result of the improper payments, the Company was reasonably likely to face regulatory scrutiny; (5) that the Company had not completed adequate due diligence before acquiring Frutarom; (6) that, as a result of the foregoing, the Company was unlikely to achieve purported synergies from the acquisition; and (7) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.