Filed Pursuant to Rule 424(b)(3)
Registration No. 333-225728

SHARES OF COMMON STOCK, PAR VALUE $0.125 PER SHARE TO BE ISSUED IN CONNECTION WITH THE PROPOSED MERGER OF FRUTAROM INDUSTRIES LTD. WITH ICON NEWCO LTD., A WHOLLY OWNED SUBSIDIARY OF INTERNATIONAL FLAVORS & FRAGRANCES INC.

THIS IS NOT A PROXY STATEMENT OR NOTICE OF MEETING. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

This prospectus of International Flavors & Fragrances Inc., a New York corporation (“IFF”, “us” or “we”), relates to shares of IFF common stock, par value $0.125 per share (“IFF common stock”) to be issued to the holders of ordinary shares, par value NIS 1.00 (“Frutarom ordinary shares”), of Frutarom Industries Ltd., a company organized under the laws of the State of Israel (“Frutarom”), as provided for in the Agreement and Plan of Merger, dated as of May 7, 2018, by and among IFF, Frutarom and Icon Newco Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of IFF (“Merger Sub”). A copy of the merger agreement is attached as Annex A to this prospectus.

Upon the terms and subject to the conditions of the merger agreement, and in accordance with the Companies Law 5759-1999 of the State of Israel (together with the rules and regulations thereunder, the “ICL”), at the effective time of the merger contemplated by the merger agreement, Merger Sub (as the target company, or Chevrat Ha’Ya’ad) will be merged with and into Frutarom (as the absorbing company, or HaChevra Ha’Koletet) as the surviving company of the merger, with Frutarom thereby becoming a wholly owned subsidiary of IFF.

At the completion of the merger, each Frutarom ordinary share that is issued and outstanding immediately prior to the completion of the merger (other than (1) ordinary shares held by Frutarom as treasury stock (dormant shares) or (2) ordinary shares held directly or indirectly by IFF, Merger Sub or any wholly owned subsidiary of Frutarom) will be converted into the right to receive (a) $71.19 in cash and (b) 0.2490 of a share of IFF common stock, which is referred to as the “stock consideration”, with cash in lieu of fractional shares, in each case without interest and subject to applicable tax withholding. The cash and IFF common stock payable in exchange for each such Frutarom ordinary share are collectively referred to as the “merger consideration”. The fraction of a share of IFF common stock into which each such Frutarom ordinary share will be converted is referred to as the “exchange ratio”. Upon the completion of the merger, based on the exchange ratio of 0.2490, the estimated number of shares of IFF common stock issuable as a portion of the merger consideration is approximately 14.88 million shares, which will result in former Frutarom shareholders holding approximately 15.8% of the outstanding fully diluted IFF common stock, based on the number of outstanding shares of common stock and outstanding stock-based awards of IFF and the number of outstanding ordinary shares and share-based awards of Frutarom as of May 4, 2018, the last trading day for IFF common stock prior to the announcement of the merger and without taking into account the issuance by IFF of equity securities in connection with the financing of the merger. For more information on sources of funding for the merger, see the section entitled “The Merger—Financing of the Merger” beginning on page 73.

If the IFF stock price at the effective time of the merger was equal to the price of IFF common stock as of the end of the trading day on June 28, 2018, the most recent practicable date for which such information was available, holders of Frutarom ordinary shares would receive total merger consideration of approximately $101.99 per Frutarom ordinary share, without interest and subject to applicable tax withholding. The actual value of the merger consideration may differ from this example, given the IFF stock price will not be determinable until the trading day prior to the closing of the merger. IFF’s common stock is publicly traded on the New York Stock Exchange, which is referred to as the “NYSE”, and Euronext Paris under the ticker symbol “IFF.” Following the effectiveness of the merger, IFF’s common stock will also be listed on the Tel Aviv Stock Exchange, which is referred to as the “TASE”. We urge you to obtain current market quotations for IFF common stock.

The merger agreement requires that the Registrar of Companies of the State of Israel, which is referred to as the “Companies Registrar”, issue a certificate evidencing the merger in accordance with Section 323(5) of the ICL and that the holders of Frutarom ordinary shares approve the merger and related matters at a shareholder meeting. The special meeting of the holders of Frutarom ordinary shares will be held on August 6, 2018 beginning at 3:00 pm, Israel Time, at the offices of Frutarom at 2 Hamenofim Street, Herzliya, Israel, which meeting and any adjournments or postponements thereof is referred to as the “Frutarom special meeting”. At the Frutarom special meeting, in addition to the approval of the merger and the merger agreement, shareholders of Frutarom will be asked to vote separately on a number of compensation matters, subject to separate resolutions, the approval of which is not a condition to the approval of the merger. These matters will be discussed in greater detail in the notice of shareholders meeting that will be issued to Frutarom shareholders by Frutarom and will constitute a proxy statement in accordance with the rules and regulations of the Israel Securities Authority, which is referred to as the “ISA”. At the time of the Frutarom special meeting, holders of Frutarom ordinary shares will not know the exact value of the merger consideration that they will receive upon the closing of the merger.

We urge you to read the accompanying prospectus, including the Annexes and the documents incorporated by reference, carefully and in its entirety. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page 29.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger or the other transactions described in this prospectus or the securities to be issued in connection with the merger or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is July 3, 2018.

REFERENCES TO ADDITIONAL INFORMATION

This prospectus incorporates by reference important business and financial information about International Flavors & Fragrances Inc. from other documents that are not included in or delivered with this prospectus. For a listing of the documents incorporated by reference into this prospectus, see “Where You Can Find More Information” beginning on page 153.

You can obtain any of the documents incorporated by reference into this prospectus without charge by requesting them in writing or by telephone as follows:

International Flavors & Fragrances Inc. 521 West 57^th Street New York, New York 10019 Attention: Investor Relations (212) 708-7164

To receive timely delivery of the documents in advance of the Frutarom special meeting, you should make your request no later than July 30, 2018, which is five business days before the Frutarom special meeting.

You may also obtain any of the documents incorporated by reference into this prospectus without charge through the United States Securities and Exchange Commission, which is referred to as the “SEC”, website at www.sec.gov. In addition, you may obtain copies of documents filed by IFF with the SEC on IFF’s Internet website at http://www.iff.com under the tab “Investor,” then under the tab “Financials & Filings” or by contacting IFF’s Investor Relations at International Flavors & Fragrances Inc., 521 West 57^th Street, New York, New York 10019 or by calling (212) 708-7164.

We are not incorporating the contents of the websites of the SEC, IFF, or any other entity into this prospectus. We are providing the information about how you can obtain certain documents that are incorporated by reference into this prospectus at these websites only for your convenience.

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ABOUT THIS PROSPECTUS

This prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by IFF (File No. 333-225728), constitutes a prospectus of IFF under Section 5 of the Securities Act of 1933, as amended, which is referred to as the “Securities Act”, with respect to the shares of common stock, par value $0.125 per share, of IFF to be issued to Frutarom shareholders pursuant to the merger agreement.

All references in this prospectus to IFF refer to International Flavors & Fragrances Inc., a New York corporation, and/or its consolidated subsidiaries, unless the context requires otherwise. All references in this prospectus to Frutarom refer to Frutarom Industries Ltd., a company organized under the laws of the State of Israel, and/or its consolidated subsidiaries, unless the context requires otherwise. All references in this prospectus to Merger Sub refer to Icon Newco Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of IFF.

IFF has supplied all information contained or incorporated by reference into this prospectus relating to IFF and Icon Newco Ltd., and Frutarom has supplied all such information relating to Frutarom.

You should rely only on the information contained in or incorporated by reference into this prospectus. IFF and Frutarom have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference into this prospectus. This prospectus is dated as of the date set forth above on the cover page of this prospectus, and you should not assume that the information contained in this prospectus is accurate as of any date other than such date. Further, you should not assume that the information incorporated by reference into this prospectus is accurate as of any date other than the date of the incorporated document. Neither the delivery of this prospectus to Frutarom shareholders nor the issuance by IFF of shares of common stock pursuant to the merger agreement will create any implication to the contrary.

This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

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TABLE OF CONTENTS

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QUESTIONS & ANSWERS ABOUT THE MERGER

The following questions and answers briefly address some of the questions you may have about the merger, the merger agreement and the Frutarom special meeting. They may not include all the information that is important to shareholders of Frutarom. Shareholders of Frutarom should carefully read this entire prospectus, including the annexes and the other documents referred to or incorporated by reference herein.

If the merger proposal is approved at the Frutarom special meeting and the other conditions to consummation of the merger are satisfied or waived, then at the consummation of the merger, Merger Sub will be merged with and into Frutarom, with Frutarom surviving the merger and becoming a wholly owned subsidiary of IFF. As a result of the merger, Frutarom shareholders will receive cash and shares of IFF common stock for their Frutarom ordinary shares as described below. You are receiving this prospectus because IFF is registering under the Securities Act the shares of IFF common stock that is part of the merger consideration that will be issued to you upon completion of the merger.

This prospectus includes important information about the merger, the merger agreement (a copy of which is attached as Annex A to this prospectus) and the shares of IFF common stock to be issued pursuant to the merger. Frutarom shareholders should read this information carefully and in its entirety.

However, please be aware that this prospectus is not a proxy statement or notice of meeting and that we are not asking you for a proxy and you are requested not to send us a proxy. Frutarom will issue to you a notice of the Frutarom special meeting, which will contain important information about the Frutarom special meeting and constitute a proxy statement in accordance with the rules and regulations of the ISA. A translation of the notice of the Frutarom special meeting is attached as an exhibit to this Registration Statement of which this prospectus forms a part.

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The fraction of a share of IFF common stock into which each Frutarom ordinary share will be converted is referred to as the “exchange ratio”.

The commitments under the debt commitment letter and the term loan credit agreement terminate on February 7, 2019 or, under certain circumstances, on May 7, 2019.

For a more complete description of sources of funding for the merger and related costs, see “The Merger—Financing of the Merger” beginning on page 73.

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See “The Merger Agreement—Conditions to the Merger” beginning on page 107.

For a more complete description of the U.S. federal income tax consequences of the merger, see “The Merger—Certain U.S. Federal Income Tax Consequences of the Merger” beginning on page 75.

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You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the merger to you, including the consequences under any applicable state, local, foreign or other tax laws.

Frutarom has filed requests for three tax rulings from the Israel Tax Authority, which is referred to as the “ITA”, with respect to (i) withholding tax in Israel, regarding the cash consideration paid to Frutarom shareholders; (ii) a deferral of capital gains tax with respect to Frutarom shareholders which hold less than 5% of Frutarom’s issued and outstanding shares through the Nominee Company and Frutarom shareholders which hold less than 5% of Frutarom’s issued and outstanding shares directly and not through the Nominee Company, regarding the stock consideration; and (iii) the Israeli tax treatment applicable to holders of Frutarom stock options and ordinary shares issued to certain directors and employees under Section 102 of the Israeli Income Tax Ordinance [New Version], 1961, which is referred to as the “ITO”. There can be no assurance that such tax rulings will be granted before the closing or at all or that, if obtained, such tax rulings will be granted under the conditions requested by Frutarom.

For a more complete description of the Israeli tax consequences of the merger, see “The Merger—Certain Israeli Tax Consequences of the Merger” beginning on page 78.

You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the merger to you, including the consequences under any applicable state, local, foreign or other tax laws.

As of the completion of the merger, each Frutarom stock option and Frutarom restricted stock award that is outstanding and vested as of immediately prior to the completion of the merger will be canceled and converted into the right to receive the merger consideration in respect of each net share subject to such vested Frutarom stock option or vested Frutarom restricted stock award, less applicable tax withholding. For this purpose, a net share means, with respect to a Frutarom stock option or Frutarom restricted stock award, the quotient of (i) the product of (A) the excess, if any, of the value of the merger consideration over the exercise price or purchase price per Frutarom ordinary share (as applicable) subject to such Frutarom stock option or Frutarom restricted stock award, multiplied by (B) the number of Frutarom ordinary shares subject to such Frutarom stock option or Frutarom restricted stock award, divided by (ii) the value of the merger consideration.

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Treatment of Unvested Stock Options and Restricted Stock Awards

As of the completion of the merger, each Frutarom stock option and Frutarom restricted stock award that is outstanding and unvested as of immediately prior to the completion of the merger will be canceled and converted into the right of the applicable holder to receive, (A) on the applicable vesting date that applies to such unvested Frutarom stock option or unvested Frutarom restricted stock award, subject to the holder’s continued employment with Frutarom or an affiliate through such date, or (B) in the case of unvested Frutarom stock options, upon an earlier termination of the holder’s employment that would result in the vesting of such unvested Frutarom stock option, a cash payment in U.S. dollars equal to the product of (i) the total number of Frutarom ordinary shares subject to such Frutarom stock option or Frutarom restricted stock award, multiplied by (ii) the excess, if any, of the value of the merger consideration over the exercise price or purchase price per Frutarom ordinary share (as applicable) subject to such Frutarom stock option or Frutarom restricted stock award, less applicable tax withholding.

For purposes of the treatment of Frutarom stock options and Frutarom restricted stock awards described above, the value of the merger consideration that consists of shares of IFF common stock will equal the product of (1) the number of such shares of IFF common stock multiplied by (2) the “IFF stock price”. For more details on the calculation of the IFF stock price, see “The Merger Agreement—Merger Consideration” beginning on page 85.

In addition to the foregoing, the actual amounts, form of payment and timing of payments to holders of Frutarom stock options and Frutarom restricted stock awards will be subject to the provisions of certain tax rulings, as applicable. See “The Merger Agreement—Conversion of Shares; Payment Procedures; Withholding” below.

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RISK FACTORS

You should carefully consider the following risks, the risks associated with IFF’s business found in IFF’s Exchange Act reports, including its Annual Report on Form 10-K for the year ended December 31, 2017 and its Quarterly Report on Form 10-Q for the fiscal quarter period ended March 31, 2018, which are incorporated by reference in this prospectus, and other information contained in or incorporated by reference into this prospectus, including the matters addressed under the caption “Cautionary Note Regarding Forward-Looking Statements”.

Risks Related to the Merger

If IFF and Frutarom are unable to complete the merger, in a timely manner or at all, each company’s business and stock price may be adversely affected.

IFF and Frutarom’s obligations to consummate the merger are subject to the satisfaction or waiver of the conditions described in the section entitled “The Merger Agreement—Conditions to the Merger”.

The required satisfaction of the closing conditions could delay the completion of the merger for a significant period of time or prevent it from occurring. Any delay in completing the merger could cause IFF not to realize some or all of the benefits that the parties expect IFF to achieve following the merger.

If the merger is not completed or is delayed, each company’s share price could fall to the extent that each company’s current price reflects an assumption that the merger will be completed on the expected timeline. Furthermore, if the merger is delayed or is not completed and the merger agreement is terminated, IFF and Frutarom may suffer other consequences that could adversely affect each of their businesses, results of operations and share price, including the following:

Uncertainty about the merger may adversely affect each company’s relationships with its customers and employees, which could negatively affect IFF and Frutarom’s business, whether or not the merger is completed.

The announcement of the merger may cause uncertainties in IFF’s and Frutarom’s relationships with their respective customers which could impair each company’s ability to maintain or expand its historical customer sales growth. Furthermore, uncertainties about the merger may cause current and prospective employees of IFF and Frutarom to experience uncertainty about their future with their respective companies. These uncertainties may impair the ability of IFF and Frutarom to retain, recruit or motivate key employees which could affect their respective businesses.

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The regulatory approvals required in connection with the merger may not be obtained or may contain materially burdensome conditions.

Completion of the merger is conditioned upon the receipt of certain regulatory approvals, and neither IFF nor Frutarom can provide assurance that these approvals will be obtained. If any conditions or changes to the proposed structure of the merger are required to obtain these regulatory approvals, they may have the effect of jeopardizing or delaying completion of the merger or reducing the anticipated benefits of the merger. If IFF agrees to any material conditions in order to obtain any approvals required to complete the merger, the business and results of operations of the combined company may be adversely affected.

The issuance of shares of IFF’s common stock to Frutarom shareholders in connection with the merger and to finance part of the cash consideration for the merger, and any future offerings of securities by IFF, will cause

Frutarom shareholders to have a significantly lower ownership and voting interest in IFF than they currently have in Frutarom and will result in Frutarom shareholders having less influence over management.

The merger will be financed in part by the issuance of shares of IFF’s common stock to shareholders of Frutarom. Based on the exchange ratio of 0.2490, the estimated number of shares of IFF common stock issuable as a portion of the merger consideration is approximately 14.88 million shares, which will result in former Frutarom shareholders holding approximately 15.8% of the outstanding fully diluted IFF common stock, based on the number of outstanding shares of common stock and outstanding stock-based awards of IFF and Frutarom as of May 4, 2018, the last trading day for IFF common stock prior to the announcement of the merger and without taking into account the issuance by IFF of equity securities in connection with the financing of the

merger. For more information on sources of funding for the merger, see the section entitled “The Merger—Financing of the Merger” beginning on page 73. In addition, IFF expects to finance the cash portion of the merger consideration, in part, from the issuance of up to $2.2 billion in new equity. Consequently, former Frutarom shareholders will have less influence over the management and policies of IFF than they currently have over the management and policies of Frutarom.

The ratio for the exchange of Frutarom ordinary shares for IFF common stock is fixed.

Each ordinary share of Frutarom will be exchanged for $71.19 in cash and 0.2490 of a share of IFF’s common stock. This ratio of the number of ordinary shares of Frutarom to be exchanged for each share of IFF’s common stock will not change and there will be no adjustment to this exchange ratio for changes in the market price of either IFF common stock or Frutarom ordinary shares. In addition, neither IFF nor Frutarom may terminate the merger agreement solely because of changes in the market price of either company’s shares. Therefore, if the market value of IFF common stock or Frutarom ordinary shares changes relative to the market value of the other, there will not be a change, either upward or downward, in the aggregate number of shares of IFF common stock to be issued to Frutarom shareholders in the merger. The share prices of IFF common stock or Frutarom ordinary shares are by their nature subject to the general price fluctuations in the market for publicly traded equity securities and have experienced significant volatility, and you should obtain recent market quotations for IFF common stock or Frutarom ordinary shares. In addition, there will be a period of time between the date when shareholders of Frutarom vote on the merger and the date when the merger is completed and Frutarom shareholders receive shares of IFF common stock. Neither IFF nor Frutarom can predict or give any assurances as to the relative market prices of their shares before, at or after Frutarom’s shareholder vote on the merger.

The merger agreement contains provisions that restrict the ability of Frutarom to pursue alternatives to the merger and, in specified circumstances, could require Frutarom to pay IFF a substantial termination fee.

The merger agreement contains provisions that make it more difficult for Frutarom to be acquired by any person other than IFF. Under the merger agreement, Frutarom and its representatives are restricted, among other

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things, from initiating, seeking, soliciting, knowingly facilitating or knowingly encouraging (including by way of furnishing any nonpublic information) the making or submission of a third-party acquisition proposal, and the Frutarom board is restricted from withdrawing, modifying or qualifying its recommendation that Frutarom shareholders vote for the approval of the merger, in each case, subject to certain qualifications and exceptions set forth in the merger agreement. Under certain circumstances, Frutarom may terminate the merger agreement in order to enter into an agreement with respect to a superior proposal, if the Frutarom board (after consultation with Frutarom’s outside financial advisor and outside legal counsel) determines that such proposal is more favorable to Frutarom shareholders (taking into account, among other relevant factors, any changes to the merger agreement proposed by IFF within four business days of IFF’s receipt of the terms of such proposal, or within two business days of IFF’s receipt of any material amendment to such proposal) than the merger. If the Frutarom board recommends such superior proposal to Frutarom shareholders but does not terminate the merger agreement, IFF would be entitled to terminate the merger agreement. Under either of these circumstances, Frutarom would be required to pay IFF a termination fee equal to $191 million. See the sections entitled “The Merger Agreement—Termination”, “The Merger Agreement—Effect of Termination” and “The Merger Agreement—Termination Fee” on page 108, page 110 and page 110, respectively, of this prospectus.

These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Frutarom from considering or proposing that acquisition, even if such third party were prepared to enter into a transaction that would be more favorable to Frutarom and its shareholders than the merger, or might result in a third party proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

IFF, Frutarom and the combined company may be subject to litigation in connection with the merger.

Lawsuits may be filed against IFF and Frutarom, their respective subsidiaries, and/or their respective directors or executive officers in connection with the merger and/or the related transactions. In addition, lawsuits may be filed against the combined company following the merger. If any such lawsuit is filed, it could result in a reduction in the stock price of IFF, Frutarom or the combined company following the merger, substantial costs and diversion of management’s attention and resources, which could adversely affect the business, financial condition or results of operations of IFF, Frutarom and the combined company whether or not a settlement or other resolution is achieved.

The rights of holders of Frutarom ordinary shares will change as a result of the merger.

Upon completion of the merger, shareholders of Frutarom will become IFF stockholders and their rights as shareholders of IFF will be governed by IFF’s certificate of incorporation, IFF’s bylaws and New York corporate law. The terms of IFF’s certificate of incorporation and by-laws and New York corporate law are, in some respects, different than the terms of Frutarom’s articles of association and Israeli corporate law, which currently govern the rights of Frutarom shareholders. For more information, see the section entitled “Comparison of Shareholder Rights” on page 137 of this prospectus.

Risks Related to the Combined Company

IFF may not realize the benefits anticipated from the merger, which could adversely affect IFF’s stock price.

If completed, the merger, which contemplates IFF’s acquisition of Frutarom, will be IFF’s largest acquisition to date. The anticipated benefits from the merger are, necessarily, based on projections and assumptions about the combined business of IFF and Frutarom, which may not materialize as expected or which may prove to be inaccurate. IFF’s ability to achieve the anticipated benefits will depend on its ability to successfully and efficiently integrate the business and operations of Frutarom with those of IFF and achieve the

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expected synergies. IFF may encounter significant challenges with successfully integrating and recognizing the anticipated benefits of the merger, including the following:

In addition, IFF’s anticipated benefits of the merger contemplate significant cost-saving synergies over time. Consequently, even if IFF is able to successfully integrate the operations of Frutarom with its own, IFF may not realize the full benefits of the merger if it is unable to identify and implement the anticipated cost savings or if the actions taken to implement such cost-savings have unintended consequences on IFF’s other business operations.

If IFF does not successfully manage these issues and the other challenges inherent in integrating an acquired business of the scale of Frutarom, then it may not achieve the anticipated benefits of the merger, IFF could incur unanticipated expenses and charges and its operating results and the value of its common stock could be materially and adversely affected.

The merger may result in significant charges or other liabilities that could adversely affect the financial results of the combined company.

The financial results of IFF following the merger may be adversely affected by cash expenses and non-cash accounting charges incurred in connection with the integration of the business and operations of Frutarom.

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Furthermore, as a result of the merger, IFF will record a significant amount of goodwill and other intangible assets on its consolidated financial statements, which could be subject to impairment based upon future adverse changes in IFF’s business or prospects including its inability to recognize the benefits anticipated by the merger.

In addition, upon the completion of the merger, IFF will be liable for some or all of Frutarom’s liabilities, including unknown and contingent liabilities that Frutarom assumed in connection with their prior acquisitions that IFF may have failed to or been unable to identify in the course of performing due diligence. A significant component of Frutarom’s growth in recent years has come through acquisitions. IFF’s ability to accurately identify and assess the magnitude of the liabilities assumed by Frutarom in these acquisitions may be limited by, among other things, the information available to IFF and Frutarom and the limited operating experience that Frutarom has with these acquired entities. Furthermore, Frutarom has additional future obligations regarding certain of these acquisitions, including outstanding earn-out obligations and put options requiring Frutarom to purchase additional shares in the acquired companies. If IFF is not able to completely assess the scope of these liabilities or if these liabilities are neither probable nor estimable at this time, IFF’s future financial results could be adversely affected by unanticipated reserves or charges, unexpected litigation or regulatory exposure, unfavorable accounting charges, unexpected increases in taxes due, a loss of anticipated tax benefits or other adverse effects on its business, operating results or financial condition. The price of IFF’s common stock following the merger could decline to the extent the combined company’s financial results are materially affected by any of these events.

The use of cash and incurrence of significant indebtedness in connection with the financing of the merger may have an adverse impact on IFF’s liquidity, limit its flexibility in responding to other business opportunities and increase its vulnerability to adverse economic and industry conditions.

IFF will finance the merger in part by the use of cash on hand, the incurrence of a significant amount of indebtedness and issuances of equity. As of March 31, 2018, IFF had approximately $305.3 million of cash and cash equivalents and approximately $1.7 billion of total debt outstanding. In connection with the merger, IFF expects to incur significant new debt. The proceeds from the new debt are expected to be used to pay part of the purchase price, refinance existing debt of both IFF and Frutarom and pay transaction-related fees and expenses. If IFF is unable to raise financing on acceptable terms, it may need to rely on its bridge loan facility, which may result in higher borrowing costs and a shorter maturity than those from other anticipated financing alternatives. The use of cash on hand and indebtedness to finance the merger will reduce IFF’s liquidity and could cause IFF to place more reliance on cash generated from operations to pay principal and interest on its debt, thereby reducing the availability of its cash flow for working capital, dividend and capital expenditure needs or to pursue other potential strategic plans. The increased indebtedness may also have the effect, among other things, of limiting IFF’s ability to obtain additional financing, if needed, limiting IFF’s flexibility in the conduct of its business and making it more vulnerable to economic downturns and adverse competitive and industry conditions.

IFF’s actual financial position and results of operations following the merger may differ materially from the unaudited pro forma financial information included in this prospectus.

The unaudited pro forma financial information contained in this prospectus is presented for illustrative purposes only and may not be an indication of IFF’s financial condition or results of operations following the merger. The unaudited pro forma financial information has been derived from the historical audited and unaudited consolidated financial information of IFF and Frutarom, respectively, and certain adjustments and assumptions have been made regarding IFF after giving effect to the merger. The information upon which these adjustments and assumptions have been made is preliminary, and these types of adjustments and assumptions are difficult to make with accuracy. For example, the unaudited pro forma financial information does not reflect all costs that are expected to be incurred by IFF in connection with the merger. As a result, IFF’s actual financial condition and results of operations following the completion of the merger may not be consistent with, or evident from, the unaudited pro forma financial information.

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In addition, the assumptions used in preparing the unaudited pro forma financial information may prove to be inaccurate, and other factors may affect IFF’s financial condition or results of operations following the consummation of the merger. Any potential decline in IFF’s financial condition or results of operations may cause significant variations in the market price of its common stock following the merger. For additional information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” contained in this prospectus.

The combined company’s inability to integrate other recently acquired businesses or to successfully complete future acquisitions could limit its future growth or otherwise be disruptive to its ongoing business.

IFF and Frutarom have each pursued acquisition intensive growth strategies in recent years. IFF has completed five acquisitions since the beginning of 2015, while Frutarom has completed 47 acquisitions since 2011, and 22 acquisitions since the beginning of 2016. IFF and Frutarom are still in the process of integrating these recently acquired businesses and, following the merger, will also need to successfully integrate the overall businesses of IFF and Frutarom in the combined company. The anticipated benefits and synergies from recently completed acquisitions may not materialize to the extent projected or at all.

Risks Related to IFF

You should read and consider the risk factors specific to IFF’s business that will also affect the combined company after the merger. These risks are described in Part I, Item 1A of IFF’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the U.S. Securities and Exchange Commission and in other documents that are incorporated by reference into this prospectus. See the section entitled “Where You Can Find More Information” for the information incorporated by reference in this prospectus.

Risks Related to Frutarom

Frutarom’s operations are subject to effects of the global economy.

Due to the nature and type of its global activity, Frutarom is exposed to fluctuations in the global economy. Economic crisis and recession in various countries in which Frutarom operates could curb demand for Frutarom’s products and significantly slow down the development and launch of new products by Frutarom customers.

Frutarom’s operations in emerging markets are subject to political, economic and legal developments that are less predictable than those in developed markets.

Frutarom operates in a number of countries besides the United States and Western Europe, such as Russia, Ukraine, Turkey, Slovenia, Kazakhstan, China, countries in South and Central America (including Brazil, Guatemala, Peru, Chile and Mexico) and countries in northern, southern and western Africa, and is therefore exposed to political, economic and legal developments in these countries which are generally less predictable than in developed countries. Frutarom’s facilities in these countries could be subject to disruption as a result of economic and/or political instability as well as from nationalization and/or expropriation of assets situated there. There is also substantial risk relating to restrictions on Frutarom in collecting payment from its customers, distributors, or agents, as well as foreign exchange restrictions which could impede Frutarom’s ability to realize its profits or to sell its assets in these countries. While none of the emerging market countries in which Frutarom operates impose foreign exchange restrictions that affect Frutarom, such restrictions existed not long ago and there is no assurance that they will not be reinstated in the future.

Fluctuations or devaluations in currencies may negatively affect Frutarom’s results of operations.

Over 70% of Frutarom’s sales in 2017 were conducted in currencies other than the U.S. dollar, mainly the Euro, Russian Ruble, Pound Sterling, Swiss Franc, New Israeli Shekel, Chinese Yuan, Canadian Dollar,

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Brazilian Real, South African Rand, Peruvian Nuevo Sol and Mexican Peso, and changes in exchange rates affect Frutarom’s reported results in US dollar terms. In addition, in cases of extreme fluctuations in exchange rates, and since a large part of the raw materials used in the manufacture of Frutarom’s products is paid for in U.S. dollars, in Euros, or other currencies, there is no assurance that Frutarom can completely update its selling prices denominated in local currency (which is different from the currency used in buying the raw material) and maintain its margin. Frutarom does not generally undertake external hedging action nor does it use other financial instruments for protection against currency fluctuations. For further information see Frutarom’s audited financial statements included elsewhere in this prospectus.

Frutarom operates in a highly competitive industry.

Frutarom faces competition from large multinationals as well as medium-sized, small and local companies across the sectors in which it operates. Some of Frutarom’s competitors have greater financial and technological resources, larger sales and marketing platforms and more established reputation, and may therefore be better equipped to adapt to changes and industry trends.

The global market for flavors is characterized by close relations between flavor manufacturers and their customers, particularly with regard to large multinationals. Furthermore, many large multinational customers, along with increasing numbers of medium-sized customers in recent years, sometimes limit the number of their suppliers and work predominantly with a list of “approved suppliers.” To compete more effectively under these conditions, Frutarom must invest more resources in customer relations, in R&D and in matching products to customers’ needs in order to provide high quality and efficient service. Any failure to maintain good relations with its customers, forge strong relations with new customers, or secure the status of “approved supplier” with some of its customers could lead to substantial adverse effects on Frutarom’s business, operating results and financial condition.

The specialty fine ingredients market is more price sensitive than the flavors market and is characterized by relatively lower profit margins. Some fine ingredients products manufactured by Frutarom are less unique and more replaceable by competitors’ products. Production overcapacity for fine ingredients globally could also negatively impact Frutarom’s sales and profitability. Although as part of its strategy Frutarom focuses on specialty fine ingredients with higher profit margins, there is no assurance that operating margins will not erode in the future, which could substantially impact Frutarom’s business, operating results and financial condition.

Increased environmental, health and safety regulations or the loss of necessary environmental permits could adversely affect Frutarom’s operating results and financial condition.

Frutarom is subject to a variety of international and domestic health, safety and environmental statutes in the various countries in which it operates. In general, there is a trend towards increased regulation in the fields of Frutarom’s activities. This trend stems from, among other things, growing consumer sensitivity concerning the inclusion of flavor additives in food products and the fact that regulators perceive nutraceuticals, medical food and functional food products as having medicinal attributes. In some countries such products may be subjected to the same standards and regulations as applied to drugs or targeted regulation for these categories. In addition, regulators in different countries can change regulations applying to infant nutrition or clinical nutrition for the elderly in a way that might affect Frutarom’s sales in these categories. Frutarom has identified the markets for nutraceuticals, functional food, specialty fine ingredients for infant nutrition, especially infant formulas, and clinical nutrition for the elderly as important to its future growth. The subjecting of these markets to increased regulation could give rise to additional expenses which might have an adverse effect on Frutarom’s business, operating results and financial condition.

Companies such as Frutarom that operate in the flavor and fine ingredients industry make use of, manufacture, sell, and distribute substances that are sometimes considered hazardous and are therefore subject to extensive regulation concerning the storage, handling, manufacture, transport, use and disposal of such

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substances and their components and byproducts. Frutarom’s production and R&D activities in the various countries where it operates are subject to various regulations and standards relating to air emissions, sewage treatment and the use, handling and discharge of hazardous material as well as clean-up of existing environmental contamination. Any further tightening of such laws and regulations could have a substantial adverse effect on Frutarom’s business, operating results and financial condition.

In addition to covering its ongoing environmental compliance costs, Frutarom might also incur nonrecurring charges associated with remedial action needed to be taken at its production sites. As environment-related incidents cannot be foreseen with any certainty, the sums that Frutarom allocates or will allocate for such matters may turn out to be inadequate. Ongoing and nonrecurring environment-related expenses could each have a substantial adverse effect on Frutarom’s business, operating results and financial condition.

Frutarom is required to obtain various environmental permits concerning operations at its various production facilities and to meet the conditions set by these permits. The expansion of existing plants is also subject to securing necessary permits. Such permits might be unilaterally revoked or modified by the issuer, or might be for a limited amount of time. Any cancellation, modification and/or failure to renew or obtain a permit could have a significant adverse effect on Frutarom’s business, operating results and financial condition.

Failure to comply with environmental, health and safety laws and regulations may expose Frutarom to civil and criminal liability.

The laws and regulations concerning the environment, health and safety may subject Frutarom to civil and/or criminal liability for non-compliance or environmental pollution. Environmental, health and safety laws may include criminal sanctions (including substantial penalties) for violating them. Some environmental laws also include provisions imposing complete responsibility for the release of hazardous substances into the environment which could result in Frutarom becoming liable for clean-up efforts without any negligence or fault on its part. Other environmental laws impose liability jointly and severally, which could expose Frutarom to responsibility for cleaning up environmental pollution caused by others.

In addition, some environmental, health and safety laws are applied retroactively and could impose responsibility for acts done in the past even if such acts were carried out in accordance with the relevant legal provisions in force at the time. Criminal or civil liability under such laws may have significant adverse effects on Frutarom’s business, operating results and financial condition.

Frutarom may also become subjected to claims for personal injury or property damage arising from exposure to hazardous substances. Laws in the major countries where Frutarom operates permit legal proceedings to be instituted against it if personal injury or environmental contamination was ostensibly caused by activity at its production sites in these countries. Such legal proceedings could also be instituted by private individuals or non-governmental organizations.

Fluctuations in prices of raw materials needed for producing Frutarom’s products may negatively impact its results of operations.

The price, quality and availability of the main raw materials that Frutarom uses, especially in the field of natural products, are subject to fluctuations arising from global supply and demand. Many raw materials used by Frutarom are agricultural products whose prices, quality and availability could be affected by, among other things, poor weather conditions. Frutarom does not normally conduct futures transactions in raw materials and is exposed to price fluctuations in the raw materials it uses according to changes in global trends for prices of these raw materials. In recent periods, there has been a rise in the prices of a number of principal raw materials used by Frutarom, and such trends may have a significant adverse effect on Frutarom’s business, operating results and financial condition.

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The inability to obtain raw materials due to the loss of third party suppliers or unavailability of raw materials could impair Frutarom’s sales and adversely affect its operating results.

Frutarom is dependent on third parties for the supply of raw materials needed for manufacturing its products. Although Frutarom purchases raw materials from a very wide range of suppliers and no individual supplier accounted for more than 3% of its total raw material usage in 2017, and even though there is more than one supplier for most of the raw materials bought by Frutarom and they are usually readily available, there is no assurance that this will also continue to be the case in the future. Severe weather conditions may cause a significant shortage of natural raw materials used by Frutarom. A shortage of these raw materials could impair Frutarom’s sales for a certain period of time and adversely affect its operating results.

Product liability claims against Frutarom and potential damages under those claims could have significant adverse effects on Frutarom’s business, operating results and financial condition.

Frutarom is exposed to product liability risk, particularly due to the fact that it supplies flavors to the food and beverage, flavor and fragrance, functional food, pharma/nutraceutical and personal care industries. Should Frutarom be found responsible in a large claim of this type, its insurance coverage might be inadequate to cover damages and/or legal expenses. A lack of adequate insurance coverage could result in a significant adverse effect on Frutarom’s business, operating results and financial condition. Product liability claims brought against Frutarom could damage its reputation as well as put heavy demand on management’s time and efforts, and this could have significant adverse effects on Frutarom’s business regardless of the outcome of the claim.

The inability to integrate the businesses acquired by Frutarom during its recent growth period may lead to disruptions in its business and failure to capitalize on anticipated synergies.

A key element of Frutarom’s growth strategy has been growth through the acquisition of flavor and specialty fine ingredients manufacturers. In line with this strategy, Frutarom has made many strategic acquisitions of companies and business activities in recent years. The integration of acquired activities involves a number of risks, including possible adverse effects on Frutarom’s operating results, the loss of customers, the consuming of senior management’s time and attention, and the failure to retain key personnel including managers of the acquired activities, along with risks associated with unanticipated events in the integration of the operations, technologies, systems and services of the acquired business. In addition, Frutarom may be unable to capitalize on the anticipated synergies (including those aimed at cost savings) inherent in such acquisitions. Failure in successfully integrating its acquisitions could have adverse effects on Frutarom’s business, operating results and financial condition.

The rapid growth, as in recent years, in both Frutarom’s activities and its geographical spread requires effective management to ensure that the financial benefits, tapping of synergies and the economies of scale are achieved. An inability to adapt to the rapid growth could result in losses or acquisition costs that will not be recovered as quickly as anticipated, if at all. Such circumstances could have significant adverse effects on Frutarom’s business, its operating results and financial condition.

The loss of skilled personnel, members of senior management or other key employees could negatively impact Frutarom’s ability to compete and implement its strategy.

Frutarom’s continued future success depends on its ability to attract and retain proficient flavorists (flavor developers), lab technicians and other skilled personnel. Frutarom operates in a highly specialized market where product quality is of critical importance and having skilled personnel is necessary for ensuring the supply of high quality products. If a number of such employees were to leave at the same time, Frutarom could encounter difficulties in finding replacements with equivalent experience and abilities, a situation which could impair Frutarom’s R&D capabilities. Furthermore, Frutarom’s continued success depends to a large extent on its senior management team. The loss of services from members of senior management or other key employees could have a negative impact on Frutarom’s results and its ability to implement its strategy. A failure to recruit and retain

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skilled personnel or members of senior management could have a significant adverse effect on Frutarom’s business, operating results and financial condition.

The inability to protect its intellectual property or the loss of exclusive use of its proprietary formulas to create flavors may have a significant adverse impact on Frutarom’s business, operating results and financial condition.

Frutarom’s business relies on intellectual property, mainly consisting of formulas used to create its flavors. Frutarom does not register these formulas but they are kept highly confidential and considered trade secrets and, as such, are accessible to just a very limited circle of people within Frutarom. Although Frutarom believes it is not significantly reliant on any individual intellectual property right, proprietary formula, patent or license, a breach of confidentiality with respect to the formulas or loss of access to them and/or the future expiration of intellectual property rights could have a significant adverse impact on Frutarom’s business, operating results and financial condition.

Frutarom relies, in part, on confidentiality agreements, ownership of intellectual property, and non-competition agreements with employees, vendors and third parties in order to protect its intellectual property. It is possible that these agreements will be breached and that Frutarom may lack an adequate remedy for any such breach. Disputes may arise concerning the ownership of intellectual property or the extent to which the confidentiality agreements remain in force. Furthermore, Frutarom’s trade secrets may become revealed to its competitors or developed independently by them, in which case Frutarom will not be able to enjoy exclusive use of some of its formulas or maintain confidentiality concerning its products.

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THE PARTIES TO THE MERGER

IFF

IFF is a leading innovator of sensory experiences that move the world. IFF co-creates products that consumers taste, smell, or feel in fine fragrances and beauty, detergents and household goods, and food and beverages. IFF’s approximately 7,300 team members globally take advantage of its capabilities in consumer insights, research and product development, creative expertise and customer intimacy to partner with IFF’s customers in developing innovative offerings for consumer products. IFF believes that its collaborative approach will generate market share gains for its customers.

IFF’s international presence positions it to serve both IFF’s global customers and the increasing number of regional and high-end and middle-market specialty consumer goods producers. IFF operates 37 manufacturing facilities and 69 creative centers and application laboratories located in 37 different countries. IFF partners with its customers to develop over 46,000 products that are provided to customers in approximately 162 countries.

IFF principally competes in the flavors and fragrances market, which is part of a larger market that supplies a wide variety of ingredients and compounds used in consumer products. The broader market includes large multi-national companies and smaller regional and local participants that supply products such as seasonings, texturizers, spices, enzymes, certain food-related commodities, fortified products and cosmetic ingredients. The global market for flavors and fragrances has expanded consistently, primarily as a result of an increase in demand for, and an increase in the variety of, consumer products containing flavors and fragrances.

In 2017, IFF achieved sales of approximately $3.4 billion, making it a leading company in the global flavors and fragrances sub-segment of the broader consumer products ingredients and compounds market. IFF believes that its global presence, diversified business platform, broad product portfolio and global and regional customer base position it to achieve long-term growth as the flavors and fragrances markets expand.

IFF operates in two business segments, Flavors and Fragrances. In 2017, IFF’s flavors business represented 48% of its sales, while its fragrances business represented 52% of sales. IFF’s business is geographically diverse, with sales to customers in the four regions set forth below:

IFF is committed to competing in emerging markets. IFF believes that more significant future growth potential for the flavors and fragrances industry, and for its business, exists in the emerging markets (all markets except North America, Japan, Australia, and Western, Southern and Northern Europe). Over the past five years, IFF’s currency neutral sales growth rate in emerging markets has outpaced that of developed markets. IFF expects this long-term trend to continue for the foreseeable future.

IFF has operated in some of the largest emerging markets for multiple decades. As a result of these operations, sales in emerging markets represented 48% of 2017 sales and 51% of 2016 sales. As IFF’s customers seek to grow their businesses in emerging markets, IFF provides them the ability to leverage its long-standing international presence and extensive market knowledge to help drive their brands in these markets. To stay competitive in its industry, IFF must adapt to rapidly shifting consumer preferences and customer demands. IFF believes its consumer insights and customer relationships help to drive innovation that benefits IFF and its customers. During 2017, IFF’s 25 largest customers accounted for 50% of its sales. Sales to IFF’s largest customer across all end-use categories accounted for 11% to 12% of IFF’s sales for each of the last three fiscal years. These sales were principally in IFF’s fragrances business.

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IFF’s principal executive offices are located at 521 West 57th Street, New York, New York 10019 and its telephone number is (212) 765-5500. IFF’s website address is www.IFF.com. Information contained on IFF’s website does not constitute part of this prospectus. IFF’s common stock is publicly traded on the NYSE and Euronext Paris, under the ticker symbol “IFF.” Additional information about IFF is included in documents incorporated by reference in this prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page 153.

Frutarom

Frutarom is a global company established in Israel in 1933 and operating in the global flavors and specialty fine ingredients markets. Frutarom, through its subsidiaries, develops, produces and markets flavors and fine ingredients used in manufacturing food, beverages, flavors and fragrances, pharma/nutraceuticals, cosmetics and personal care products. As of December 31, 2017, Frutarom operated 72 production sites, 90 research and development laboratories, and 109 sales offices in Europe, North America, Latin America, Israel, Asia, Africa and New Zealand, and employed 5,223 people throughout the world. In 2017, Frutarom marketed and sold over 70,000 products to more than 30,000 customers in more than 150 countries.

Frutarom operates in two main activities which constitute its core businesses and are reported as business segments in its financial statements: flavors activity and specialty fine ingredients activity. In addition, as part of a comprehensive solution offered to customers, Frutarom imports and markets raw materials manufactured by third parties. This activity is presented as part of trade and marketing operations, which is not a core business.

Frutarom became a public company in 1996 upon registration of its shares for trade on the Tel Aviv Stock Exchange. In February 2005, Frutarom’s Global Depository Receipts were also listed on the London Stock Exchange Official List. Frutarom’s principal executive offices are located at 2 Hamenofim Street, Building A, Herzliya, Israel 4672553, and its telephone number is +972-9960-3800.

For additional information on Frutarom’s business, see the section entitled “Management’s Discussion of Financial Condition and Results of Operations of Frutarom—Overview” in this prospectus.

Icon Newco Ltd.

Merger Sub, a wholly owned subsidiary of IFF, is a company organized under the laws of the State of Israel that was formed on May 2, 2018 for the sole purpose of effecting the merger. Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement. In the merger, Merger Sub will be merged with and into Frutarom, with Frutarom surviving as a wholly owned subsidiary of IFF.

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BUSINESS OF FRUTAROM AND CERTAIN INFORMATION ABOUT FRUTAROM

Overview

Frutarom is a global company established in Israel in 1933 and operating in the global flavors and specialty fine ingredients markets. Frutarom, through its subsidiaries, develops, produces and markets flavors and fine ingredients used in manufacturing food, beverages, flavors and fragrances, pharma/nutraceuticals, cosmetics and personal care products. As of December 31, 2017, Frutarom operated 72 production sites, 90 research and development laboratories, and 109 sales offices in Europe, North America, Latin America, Israel, Asia, Africa and New Zealand, and employed 5,223 people throughout the world. In 2017, Frutarom marketed and sold over 70,000 products to more than 30,000 customers in more than 150 countries.

Business Segments

Frutarom operates in two main activities which constitute its core businesses and are reported as business segments in its financial statements: flavors activity (“Flavors Activity”) and specialty fine ingredients activity (“Specialty Fine Ingredients Activity,” and together with Flavors Activity, “core businesses”). In addition, as part of a comprehensive solution offered to customers, Frutarom imports and markets raw materials manufactured by third parties. This activity is presented as part of trade and marketing operations (“Trade & Marketing Activity”), which is not a core business.

Flavors Activity

Frutarom develops, produces, markets and sells sweet and savory flavor solutions and other solutions which, in addition to flavors, contain fruit or vegetable ingredients and other natural ingredients and are used mainly in the manufacture of foods, beverages and other consumer products. Frutarom develops thousands of different flavors for its customers, most of which are tailor-made for specific customers. In accordance with its strategy, Frutarom’s Flavors Activity has grown significantly by combining organic growth and acquisitions, accounting in 2017 for approximately 81% of Frutarom’s sales for its core businesses and approximately 75% of its overall sales.

Specialty Fine Ingredients Activity

Frutarom develops, produces, markets and sells natural flavor extracts, natural functional food ingredients, natural pharma/nutraceutical extracts, natural biotech products, including algae-based products, natural colors for food, natural antioxidants used to provide solutions for food protection, natural cosmetics products, specialty fine ingredients for infant nutrition and for clinical elderly nutrition, essential oils, specialty citrus products and aromatic chemicals. Specialty fine ingredients products are sold primarily to the food, beverage, flavor, fragrance, pharma/nutraceutical, infant nutrition, cosmetics and personal care industries. Specialty Fine Ingredients Activity accounted for approximately 19% of Frutarom’s sales for its core businesses in 2017 and approximately 18% of its overall sales.

Trade & Marketing Activity

In addition to and in support of its core businesses, Frutarom imports and markets various raw materials that it does not manufacture. This activity greatly expanded through acquisitions starting in 2012, and centers mainly on Central and Eastern Europe, Latin America and Israel. Sales from this activity accounted for approximately 7% of Frutarom’s overall sales in 2017. Frutarom does not consider Trade & Marketing Activity part of its core businesses.

Acquisitions

Frutarom made eleven acquisitions in 2015, eight in 2016, twelve in 2017 and two in 2018, with the aim to enhance its cross-selling opportunities both for products and for customers and contribute to its growth in sales.

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Supply Chain

Procurement and Suppliers

In connection with its manufacturing business, Frutarom purchases thousands of raw materials from a wide range of suppliers. The main raw materials purchased by Frutarom include plants, leaves and roots for producing natural flavor extracts, natural functional food ingredients and pharma/nutraceutical extracts. Frutarom also purchases essential oils, natural and synthetic chemicals, spices, fruit components, alcohol, esters, acids and oleoresins.

Frutarom’s local supply chain departments work in tandem with the global supply chain headquarters to manage the purchase of raw materials in an effort to ensure their ongoing supply. Although there are exclusive suppliers for a relatively small number of the raw materials used by Frutarom, such raw materials are only required for a limited number of its products and Frutarom does not consider its dependence on such suppliers to be material.

Manufacturing

As of December 31, 2017, Frutarom had 72 production sites globally. Most of Frutarom’s products, and in particular its natural products, are tailor-made and customized in accordance with its customers’ needs. Frutarom’s major production sites related to its Flavors Activity are located in countries such as Belgium, Brazil, China, Canada, France, Germany, Guatemala, Ireland, India, Israel, Italy, Mexico, New Zealand, Peru, Poland, Russia, Slovenia, South Africa, Switzerland, Turkey, the U.K. and the U.S. The manufacturing process for flavors generally involves the blending of multiple ingredients pursuant to Frutarom’s formulas, and tends to be less complex and capital intensive than the manufacturing of specialty fine ingredients.

Frutarom’s major production sites related to its Specialty Fine Ingredients Activity are located in countries such as Israel, China, Germany, Slovenia, Spain, Switzerland, the U.K. and the U.S. The manufacturing process for specialty fine ingredients is generally more complex, requires a larger capital investment in facilities and is also subject to stricter environmental and regulatory standards when compared to the manufacturing of flavors.

Marketing and Distribution

Frutarom maintains a global sales and marketing and customer technical support infrastructure staffed with local personnel in its main target markets. As of December 31, 2017, Frutarom had 109 sales offices, 90 research and development labs located in its main target markets in close proximity to its customers and approximately 1,964 employees working in research and development and sales and marketing. Frutarom markets and sells its products primarily through its own sales and marketing personnel. In some countries, however, Frutarom retains third-party local agents and distributors to sell its products.

Intellectual Property

Frutarom’s business relies on intellectual property, mainly consisting of formulas used to create its flavors. The formulas are not registered. Instead, the formulas, considered to be Frutarom’s trade secrets, are kept highly confidential and accessible to a minimal number of people within Frutarom. Frutarom has registered patents that relate primarily to production processes for ingredients and products in the fields of pharma/nutraceutical, cosmetics, and specialty fine ingredients for infant nutrition in infant formulas. Frutarom has registered trademarks on some of its products in certain countries in which it operates. To protect its intellectual property, Frutarom includes confidentiality, non-competition, and intellectual property transfer restrictions clauses in its employment contracts, as well as in contracts with consultants, suppliers and customers.

Government Regulation

Frutarom is subject to a variety of international and domestic health, safety and environmental statutes in the various countries in which it operates. These laws and regulations include, among others, the U.S. Food and Drug

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Administration’s regulations, EU directives, Codex Alimentarius in South America and other countries, and regulations set by the Ministry of Health in Israel. In general, there is a trend towards increased regulation in the fields of Frutarom’s activities. This trend stems from, among other things, growing consumer sensitivity concerning the inclusion of flavor additives in food products and the fact that regulators perceive nutraceuticals, medical food and functional food products as having medicinal attributes. In some countries such products may be subjected to the same standards and regulations as applied to drugs or targeted regulation for these categories. In addition, the regulations applicable to Frutarom are subject to change at any time.

Frutarom’s production sites and research and development laboratories worldwide from time to time make use of, manufacture, sell, and distribute substances that are sometimes considered hazardous and are therefore subject to extensive regulation concerning the storage, handling, manufacture, transport, use and disposal of such substances and their components and byproducts. Frutarom’s production and R&D activities in the various countries where it operates are subject to various regulations and standards relating to air emissions, sewage treatment and the use, handling and discharge of hazardous material as well as clean-up of existing environmental contamination.

As of December 31, 2017, Frutarom was in material compliance with the health, safety and environmental regulations that apply to it in the various countries in which it operates.

Legal Proceedings

In the ordinary course of business, Frutarom is, and will continue to be, involved in various legal proceedings from time to time. Frutarom may not be able to predict the timing or outcome of these or future legal proceedings with certainty, and an unfavorable resolution of one or more of such matters could have a material adverse effect on Frutarom’s business, prospects, financial condition or results of operations.

Currently, Frutarom is not involved in any legal proceeding that, in the opinion of Frutarom’s management, could reasonably be expected to have a material adverse effect on its business, prospects, financial condition or results of operations.

Employees

As of December 31, 2017, Frutarom employed 5,223 employees.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS OF FRUTAROM

Overview

Company Background

Frutarom is a global company established in Israel in 1933 and operating in the global flavors and specialty fine ingredients markets. Frutarom, through its subsidiaries, develops, produces and markets flavors and fine ingredients used in manufacturing food, beverages, flavors and fragrances, pharma/nutraceuticals, cosmetics and personal care products. As of December 31, 2017, Frutarom operated 72 production sites, 90 research and development laboratories, and 109 sales offices in Europe, North America, Latin America, Israel, Asia, Africa and New Zealand, and employed 5,223 people throughout the world. In 2017, Frutarom marketed and sold over 70,000 products to more than 30,000 customers in more than 150 countries.

Frutarom operates in the framework of two main activities which are reported as business segments on its financial statements: flavors activity (“Flavors Activity”) and specialty fine ingredients activity (“Specialty Fine Ingredients Activity”) (together “core businesses”). In addition, as part of a comprehensive solution offered to customers, Frutarom imports and markets raw materials manufactured by third parties. This activity is presented as part of trade and marketing operations (“Trade & Marketing Activity”), which is not a core business.

Flavors Activity

Frutarom develops, produces, markets and sells sweet and savory flavor solutions and other solutions which, in addition to flavors, contain fruit or vegetable ingredients and other natural ingredients and are used mainly in the manufacture of foods, beverages and other consumer products. Frutarom develops thousands of different flavors for its customers, most of which are tailor-made for specific customers. In accordance with its strategy, Frutarom’s Flavors Activity has grown significantly by combining organic growth and acquisitions, accounting in 2017 for 81% of Frutarom’s sales for its core businesses and 75% of its overall sales.

Specialty Fine Ingredients Activity

Frutarom develops, produces, markets and sells natural flavor extracts, natural functional food ingredients, natural pharma/nutraceutical extracts, natural biotech products, including algae-based products, natural colors for food, natural antioxidants used to provide solutions for food protection, natural cosmetics products, specialty fine ingredients for infant nutrition and for clinical elderly nutrition, essential oils, specialty citrus products and aromatic chemicals. Specialty fine ingredients products are sold primarily to the food, beverage, flavor, fragrance, pharma/nutraceutical, infant nutrition, cosmetics and personal care industries.

Specialty Fine Ingredients Activity accounted for 19% of Frutarom’s sales for its core businesses in 2017 and 18% of its overall sales.

Trade & Marketing Activity

In addition to and in support of its core businesses, Frutarom imports and markets various raw materials that it does not manufacture. This activity expanded significantly following the acquisitions of Slovenian company Etol Tovarna arom in eteričnih olj d.o.o. in 2012, the Russian company Protein Technologies Ingredients Group in 2013, the flavors and natural colors for food division of the Peruvian company Montana S.A. in 2014 and the Mexican company Proveedores de Ingenieria Alimentaria, S.A. de C.V. at the end of 2016, and centers mainly on Central and Eastern Europe, Latin America and Israel. Sales from this activity accounted for 7% of Frutarom’s overall sales in 2017. Frutarom does not consider Trade & Marketing Activity part of its core businesses.

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Factors Affecting Frutarom’s Results of Operations

Acquisitions

Frutarom made eleven acquisitions in 2015, eight in 2016, twelve in 2017 and two in 2018, with the aim to enhance its cross-selling opportunities both for products and for customers and contribute to its growth in sales, including the following acquisitions:

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For additional information relating to Frutarom’s acquisitions, see Note 5 to Frutarom’s audited financial statements included elsewhere in this prospectus.

Long-term Relationships with Customers

The flavors and fine ingredients market is characterized by long-term relationships between flavor manufacturers and their customers, which include mostly companies in the food and beverage, flavor and fragrance extracts and pharmaceutical/nutraceutical industries. Much importance is placed in these industries on supplier reliability, quality of service, and the manufacturers’ understanding of their customers’ needs. As a result, some large multinational customers, as well as an increasing number of medium-sized customers, have been reducing the number of their flavor suppliers to a select list of authorized suppliers.

Research and Development

Since end-user preferences are constantly changing and the markets in which customers operate (particularly the foods and beverages market) are dynamic and competitive, the market is characterized by an abundance of new and innovative products. Manufacturers therefore need to invest in research and development and offer a wide range of new products, either at the initiative of the flavor manufacturer or at the initiative of the customer (the food or beverages manufacturer) and in collaboration with them.

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Raw Materials

Frutarom purchases thousands of raw materials that go into its products from a wide range of suppliers, having more than one supplier for most raw materials. The main raw materials purchased by Frutarom include plants, leaves and roots for producing natural flavor extracts, natural functional food ingredients and pharma/nutraceutical extracts.

There are exclusive suppliers for a small number of raw materials, but since these raw materials go into only a limited number of Frutarom products, out of its wide range of over 70,000 products, in the view of management Frutarom’s dependence on these suppliers is not material.

Frutarom maintains relatively large inventories of certain raw materials as most of the natural substances used by Frutarom derive from field crops. Delivery times are also usually longer than those to which Frutarom has committed to its customers, making it necessary for Frutarom to hold enough raw material inventory to fill its customers’ orders on short notice. On the other hand, Frutarom generally maintains very limited finished goods inventory. Furthermore, the availability and prices of many of the raw materials, especially natural materials, used by Frutarom to manufacture its products are exposed to fluctuations due to global supply and demand.

Foreign Currency Effects

Over 70% of Frutarom’s sales in 2015, 2016 and 2017 were conducted in currencies other than the U.S. dollar, mainly the Euro, Russian Ruble, Pound Sterling, Swiss Franc, Canadian Dollar, New Israeli Shekel, Chinese Yuan, Mexican Peso, Polish Zloty Brazilian Real, and Peruvian Nuevo Sol and South African Rand. Therefore changes in exchange rates affect Frutarom’s results as reported in U.S. dollars.

Frutarom’s exposure to currency fluctuations is reduced by the fact that part of the raw material purchases and operational expenditures in the various countries in which it operates are also paid for in most cases in the respective local currencies, so that most of the effect applies to the translation of sales revenues and profits into U.S. dollar terms.

The weakening of the U.S. dollar versus some of the various above mentioned currencies has contributed to an increase of approximately 1.9% in Frutarom’s sales for 2017. In 2016, the effect of currencies contributed to a decrease of approximately 2.6% in Frutarom sales.

Frutarom does not generally undertake external hedging action nor does it use other financial instruments for protection against currency fluctuations.

Economic Conditions

Due to the nature and type of its global activity, Frutarom is exposed to fluctuations in the global economy. Economic crises or recessions in important target countries could curb demand for Frutarom’s products, including its premium products, and significantly slow down the development and launch of new products by Frutarom customers. Periods of global financial distress could also impair Frutarom’s ability to raise funds for executing its strategic acquisitions and for its operations.

Regulatory Standards

Flavor and fine ingredients products are mainly intended for use by the food and beverage and pharmaceutical/nutraceutical industries, which are subject to strict quality and regulatory standards. Flavor and fine ingredients manufacturers are therefore required to meet the same strict standards. Recent years have seen a trend toward increasingly stringent quality and regulatory standards which could require manufacturers to incur greater costs and expense to comply with them. For a discussion of the regulations applicable to Frutarom’s operations, see the section entitled “Business of Frutarom and Certain Information about Frutarom—Government Regulation” included elsewhere in this prospectus.

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Seasonality

Increased demand for beverages, yogurts, ice cream and other food products during the summer months brings about an increase in sales and an improvement to a certain extent in Frutarom’s profitability margins in the second and third quarters of the year. With respect to Frutarom’s raw material needs, natural raw materials, which are derived from agricultural crops, are seasonal in their supply. In recent years, however, as a result of Frutarom’s internal growth and acquisitions, seasonal effects on its results have been moderated.

Results of Operations

The following discussion and analysis should be read in conjunction with Frutarom’s audited financial statements included elsewhere in this prospectus.

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

Sales

Frutarom’s sales in the first quarter of 2018 increased by 27.2% to $384.8 million compared to $302.5 million in the first quarter of 2017. The increase in Frutarom’s overall sales reflected increased sales in Flavors Activity and Specialty Fine Ingredients Activity, and was primarily due to acquisitions completed after the first quarter of 2017 as well as organic growth and positive impact of changes to the exchange rates of currencies in which Frutarom operates against the U.S. dollar.

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Flavors Activity

Flavors Activity sales increased by 28.3% to $281.5 million in the first quarter of 2018 compared to $219.4 million in the first quarter of 2017. The increase in sales in Flavors Activity was primarily due to the acquisitions completed after the first quarter of 2017 as well as organic growth and the positive impact of changes to the exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Specialty Fine Ingredients Activity

Sales from Specialty Fine Ingredients Activity increased 29.9% to $86.7 million in the first quarter of 2018 compared to $66.8 million in the first quarter of 2017. The increase in sales in Specialty Fine Ingredients Activity was principally due to acquisitions as well as organic growth and the positive impact of changes to the exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Trade & Marketing Activity

Sales from Trade & Marketing Activity, which is not considered a core activity, remained relatively constant in the first quarter of 2018 at $19.1 million compared to $19.0 million in the first quarter of 2017.

Cost of sales

Cost of sales includes costs of raw materials, payroll and related expenses, rent, depreciation and amortization, energy and other production expenses. Cost of sales increased by 22.6% in the first quarter of 2018 to $229.1 million (59.5% of Frutarom’s sales) compared to $186.8 million (61.8% of Frutarom’s sales) in the first quarter of 2017. The increase in cost of sales was principally due to acquisitions and additional expenses associated with organic growth.

Selling, marketing, research and development expenses—net

Selling, marketing, research and development expenses—net consists mainly of payroll and related expenses, research and development expenses, marketing commissions, office fees, transportation and vehicle expenses, depreciation and other expenses.

Selling, marketing, research and development expenses—net increased by 37.1% in the first quarter of 2018 to $67.4 million compared to $49.2 million in the first quarter of 2017. The increase was principally due to acquisitions and additional expenses associated with organic growth.

General and administrative expenses

General and administrative expenses include payroll and related expenses, professional fees, rent and office expenses, depreciation and amortization, computing and other expenses.

General and administrative expenses increased by 22.9% in the first quarter of 2018 to $26.9 million compared to $21.9 million in the first quarter of 2017. The increase was principally due to acquisitions and additional expenses associated with organic growth.

Other expenses (income)—net

Other expenses (income)—net includes expenses for site shutdowns, expenses relating to acquisitions of subsidiaries, capital (income) losses on the sale of assets and other expenses.

Other expenses (income)—net was income of $0.3 million in the first quarter of 2018 and was relatively stable compared to the first quarter of 2017.

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Frutarom’s share of earnings of investees accounted for at equity

Frutarom’s share of earnings of investees accounted for at equity increased by 72.9% in the first quarter of 2018 to $0.7 million compared to $0.4 million in the first quarter of 2017. The increase was principally due to an acquisition.

Operating income by activity

Flavors Activity

The operating income of Flavors Activity increased by 28.9% in the first quarter of 2018 to $46.3 million compared to $35.9 million in the first quarter of 2017. The increase in operating income reflects the increase in sales from $219.4 million in the first quarter of 2017 to $281.5 million in the first quarter of 2018, which more than offset the increase in expenses from $183.4 million in the first quarter of 2017 to $235.1 million in the first quarter of 2018.

Specialty Fine Ingredients Activity

The operating income of Specialty Fine Ingredients Activity increased by 80.4% in the first quarter of 2018 to $16.1 million compared to $8.9 million in the first quarter of 2017. The increase in operating income reflects the increase in sales from $66.8 million in the first quarter of 2017 to $86.7 million in the first quarter of 2018, which reflects an increase in sales and sales of products with higher margins, and which more than offset the increase in expenses from $57.8 million in the first quarter of 2017 to $70.6 million in the first quarter of 2018.

Trade & Marketing Activity

The operating income of Trade & Marketing Activity, which is not considered a core activity, decreased to $10,000 in the first quarter of 2018 compared to $500,000 in the first quarter of 2017.

Financial expenses—net

Financial expenses—net includes primarily interest expense, gains and losses arising from changes in exchange rates and gains or losses that stem from changes in the fair value of financial assets.

Financial expenses—net in the first quarter of 2018 were approximately $6.0 million compared to $2.2 million in the first quarter of 2017. Interest expenses were $5.8 million in the first quarter of 2018 compared to $2.1 million in the first quarter of 2017, mainly due to the increase in borrowings incurred to finance acquisitions (primarily the acquisition of Enzymotec), and the rise in certain interest rates. Financial expenses arising from exchange-rate differences reached $0.1 million similar to the amount in the first quarter of 2017.

Income tax

Taxes on income for the first quarter of 2018 increased by 14.7% to $10.8 million compared to $9.4 million in first quarter of 2017. The increase in tax expense was primarily due to an increase in Frutarom’s activity and pre-tax income. Frutarom’s effective tax rate for the first quarter of 2018 was 19.2% compared to 21.9% for the first quarter of 2017.

See the notes to Frutarom’s audited financial statements included herein for additional information on taxes applicable to Frutarom.

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Year Ended December 31, 2017 Compared to Year Ended December 31, 2016

Sales

Frutarom sales in 2017 increased by 18.8% to $1,362.4 million compared to $1,147.0 million in 2016. The increase in Frutarom’s overall sales reflected increased sales in Flavors Activity, Specialty Fine Ingredients Activity and Trade & Marketing Activity, and was primarily due to the acquisitions completed after 2016 as well as organic growth and positive currency effects and positive impact of changes to the exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Flavors Activity

Flavors Activity sales for 2017 increased by 21.1% to $1,025.4 million compared to $846.5 million in 2016. The increase in sales in Flavors Activity was primarily due to the acquisitions completed in 2017 as well as organic growth and positive impact of changes to the exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Specialty Fine Ingredients Activity

Sales for Specialty Fine Ingredients Activity in 2017 increased by 14.2% to $260.1 million compared to $227.9 million in 2016. The increase in sales in Specialty Fine Ingredients Activity was principally due to

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acquisitions as well as organic growth and the positive impact of changes to the exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Trade & Marketing Activity

Sales for Trade & Marketing Activity, which is not considered a core activity, in 2017 increased by 14.4% to $91.0 million compared to $79.5 million in 2016. The increase in sales in Trade & Marketing Activity was primarily due to acquisitions as well as the positive impact of changes to the exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Cost of sales

Cost of sales increased by 18.0% in 2017 to $837.3 million (61.5% of Frutarom’s sales) compared to $709.5 million (61.9% of Frutarom’s sales) in 2016. The increase was principally due to additional expenses associated with acquisitions, higher production and volume of sales.

Selling, marketing, research and development expenses—net

Selling, marketing, research and development expenses—net increased by 12.3% in 2017 to $220.0 million compared to $196.0 million in 2016. The increase was principally due to acquisitions and additional expenses associated with organic growth.

General and administrative expenses

General and administrative expenses increased by 12.9% in 2017 to $92.2 million compared to $81.6 million in 2016. The increase was principally due to acquisitions and additional expenses associated with organic growth.

Other expenses—net

Other expenses—net decreased by 71.2% in 2017 to $3.4 million compared to $11.8 million in 2016. The decrease was principally due to the merger of Wiberg’s activities with Frutarom’s activity in savory products, primarily in Europe.

Frutarom’s share of earnings of investees accounted for at equity in 2016

Frutarom’s share of earnings of investees accounted for at equity increased by 26.0% in 2017 to $1.4 million compared to $1.1 million in 2016.

Operating income by activity

Flavors Activity

The operating income of Flavors Activity increased by 41.2% in 2017 to $177.7 million compared to $125.8 million in 2016. The increase in operating income reflects the increase in sales from $846.5 million in 2016 to $1,025.4 million in 2017, which more than offset the increase in expenses from $720.7 million in 2016 to $847.7 million in 2017.

Specialty Fine Ingredients Activity

The operating income of Specialty Fine Ingredients Activity increased by 46.8% in 2017 to $31.6 million compared to $21.5 million in 2016. The increase in operating income reflects the increase in sales from $227.9 million in 2016 to $260.1 million in 2017, which more than offset the increase in expenses from $206.3 million in 2016 to $228.5 million in 2017.

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Trade & Marketing Activity

The operating income of Trade & Marketing Activity, which is not considered a core activity, decreased by 14.1% in 2017 to $1.7 million compared to $1.9 million in 2016. The decrease in operating income reflects the increase in expenses from $77.6 million in 2016 to $89.3 million in 2017, which more than offset the increase in sales from $79.5 million in 2016 to $91.0 million in 2017.

Financial expenses—net

Net financial expenses in 2017 increased by 91.6% to $24.6 million compared to $12.8 million in 2016. The increase in financial expenses in 2017 was due principally to exchange-rate differences of trade receivable and trade payable balances, with such differences amounting to $14.5 million in 2017 compared to $4.1 million in 2016, mainly due to the strengthening of the main currencies Frutarom is active in against the U.S. dollar.

Interest expenses for 2017 amounted to $10.1 million compared to $8.8 million in 2016. The increase in interest expenses was mainly due to an increase in loans used for acquisitions.

Income tax

Taxes on income for 2017 totaled $34.8 million compared to $25.3 million for 2016. Frutarom’s effective tax rate for 2017 was 18.7% compared to 18.6% for 2016.

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

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Sales

Frutarom’s sales in 2016 increased by 31.4% to $1,147.0 million compared to $872.8 million in 2015. The increase in Frutarom’s overall sales was primarily due to organic growth and acquisitions in Flavors Activity, Specialty Fine Ingredients Activity and Trade & Marketing Activity, offset in part by the negative impact of changes in exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Flavors Activity

Flavors Activity sales for 2016 increased by 39.3% to $846.5 million compared to $607.5 million in 2015. The increase in sales in Flavors Activity was primarily due to the acquisitions completed in 2016 as well as organic growth, offset in part by the negative impact of changes in exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Specialty Fine Ingredients Activity

Sales for Specialty Fine Ingredients Activity in 2016 increased by 23.2% to $227.9 million compared with $184.9 million in 2015. The increase in sales in Specialty Fine Ingredients Activity was primarily due to the acquisitions in 2016 as well as organic growth, offset in part by the negative impact of changes in exchange rates of currencies in which Frutarom operates against the U.S. dollar.

Trade & Marketing Activity

Frutarom’s sales from Trade & Marketing Activity, which is not considered a core activity, decreased by 5.8% in 2016 to $79.5 million compared to $84.3 million in 2015. The decrease in sales in Trade & Marketing Activity was primarily due to a decrease in the price of certain trade and marketing products sold by Frutarom.

Cost of sales

Cost of sales increased by 32.7% in 2016 to $709.5 million (61.9% of Frutarom’s sales) compared to $534.7 million (61.3% of Frutarom’s sales) in 2015. The increase was principally due to acquisitions and additional expenses associated with organic growth.

Selling, marketing, research and development expenses—net

Selling, marketing, research and development expenses—net increased by 38.8% in 2016 to $196.0 million compared to $141.2 million in 2015. The increase was principally due to acquisitions and additional expenses associated with organic growth.

General and administrative expenses

General and administrative expenses increased by 28.1% in 2016 to $81.6 million, compared to $63.7 million in 2015. The primary reason for the increase was due to acquisitions and additional expenses associated with organic growth.

Other expenses—net

Other expenses—net increased by 316.6% in 2016 to $11.8 million compared to $2.8 million in 2015. The increase was principally due to expenses associated with the merger of Wiberg’s activities with Frutarom’s activity in savory products, primarily in Europe, including the integration processes and the shut-down of a facility in Stuttgart, Germany.

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Frutarom’s share of earnings of investees accounted for at equity

Frutarom’s share of earnings of investees accounted for at equity was $1.1 million in 2016, compared with zero in 2015. The increase relates to Frutarom’s investment in a 50% voting and equity interest in Wiberg Corporation in Canada in 2016.

Operating income by activity

Flavors Activity

The operating income of Flavors Activity increased by 15.7% in 2016 to $125.8 million compared to $108.8 million in 2015. The increase in operating income reflects the increase in sales from $607.5 million in 2015 to $846.5 million in 2016 which more than offset the increase in expenses from $498.8 million in 2015 to $720.7 million in 2016.

Specialty Fine Ingredients Activity

The operating income of Specialty Fine Ingredients Activity increased by 14.0% in 2016 to $21.5 million compared to $18.9 million in 2015. The increase in operating income reflects the increase in sales from $184.9 million in 2015 to $227.9 million in 2016 which more than offset the increase in expenses from $166.0 million in 2015 to $206.3 million in 2016.

Trade & Marketing Activity

The operating income of Trade & Marketing Activity, which is not considered a core activity, decreased by 32.5% in 2016 to $1.9 million compared to $2.9 million in 2015. The decrease in operating income reflects the decrease in sales from $84.3 million in 2015 to $79.5 million in 2016 which more than offset the decrease in expenses from $81.5 million in 2015 to $77.6 million in 2016.

Financial expenses—net

Net financial expenses increased by 5.3% in 2016 to $12.8 million compared to $12.2 million in 2015. In addition, financial expenses in 2016 for exchange-rate differences was $4.1 million compared to $3.0 million financial income in 2015. In 2015, there was also a non-recurring financial expense of $9.9 million for the revaluation of the financial liability related to the option to purchase the minority shares of Vantodio.

Interest expenses for 2016 amounted to $8.8 million compared to $5.3 million in 2015. The increase in interest expenses was mainly due to an increase in loans used for acquisitions.

Income tax

Taxes on income for 2016 totaled $25.3 million compared to $22.0 million in 2015. Frutarom’s effective tax rate for 2016 was 18.6%, which was unchanged compared to 2015.

Liquidity and Capital Resources

Cash Flows from Operating Activities

In the first quarter of 2018, the cash flow from operating activities was $47.6 million compared to $47.4 million in the first quarter of 2017. The net cash flow from operating activities in the first quarter of 2018 was $35.4 million compared to $42.5 million in the first quarter of 2017. The decrease in net cash flow from

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operating activities in the first quarter of 2018 compared to the first quarter of 2017 was principally due to the timing of tax payments. Taxes paid in the first quarter of 2018 amounted to approximately $12.2 million compared to approximately $4.8 million in the first quarter of 2017.

Net cash provided by operating activities was $187.5 million in 2017 compared to $124.6 million in 2016 and $91.7 million in 2015. The increase in net cash provided by operating activities in 2017 compared to 2016 was principally due to the increase in income before tax and the resulting improvement in Frutarom’s working capital.

The increase in net cash provided by operating activities in 2016 compared to 2015 was principally due to increases in income before tax and the resulting improvement in Frutarom’s working capital.

Cash Flows from Investing Activities

Net cash used in investing activities was $184.0 million in the first quarter of 2018 compared to $31.0 million in the first quarter of 2017. The increase in net cash used in investing activities in the first quarter of 2018 compared to the first quarter of 2017 was principally due to the increase in investments for acquisitions.

Net cash used in investing activities was $185.0 million in 2017 compared to $124.1 million in 2016 and $297.6 million in 2015. The increase in net cash used in investing activities in 2017 compared to 2016 was principally due to an increase in the purchase of available for sale securities, an increase in the purchase of property, plant and equipment and an increase in acquisitions, offset in part by a decrease in proceeds from the sale of property and other assets.

The decrease in net cash used in investing activities in 2016 compared to 2015 was principally due to greater acquisition activity in 2015, including a deposit payment of $131.8 million in connection with the acquisition of Wiberg, which was completed during 2016.

Cash used for property, plant and equipment were $9.4 million in the first quarter of 2018, $34.4 million in 2017, $28.5 million in 2016 and $23.9 million in 2015.

Cash Flows from Financing Activities

Net cash provided by financing activities was $189.0 million in the first quarter of 2018 compared to net cash used in financing activities of $11.6 million in the first quarter of 2017. The change in cash flows from financing activities was principally due to an increase in bank loans to $195 million in the first quarter of 2018 compared to $29.5 million in the first quarter of 2017. The increase in long-term bank loans in the first quarter of 2018 was primarily to fund the acquisition of Enzymotec.

Net cash used in financing activities was $8.4 million in 2017 compared to net cash provided by financing activities of $47.0 million in 2016 and $216.0 million in 2015.

The change in cash flows from financing activities in 2017 compared to 2016 was principally due to the payment made in 2017 to exercise a put option to acquire the remaining interest in Vantodio and an increase in repayments of long-term bank and financial institution loans, offset in part by an increase in short-term bank loans and credit in 2017.

The decrease in net cash provided by financing activities in 2016 compared to 2015 was principally due to a decrease in the incurrence of long-term bank loans and short-term bank loans and credit and an increase in repayments of long-term bank and financial institution loans.

Frutarom paid dividends totaling $7.2 million, $6.4 million and $5.8 million in 2017, 2016 and 2015, respectively.

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Capital Resources

Frutarom’s activity is financed primarily by cash flow it generates from operations and long-term and short-term loans from banking corporations and financial institutions.

Frutarom’s management believes that the cash flow it generates from current operations can be expected to cover the repayment of its anticipated liabilities without the need for any further outside sources of funds, assuming no significant deterioration in sales or profitability. As of March 31, 2018, there were no legal or economic restrictions on the ability of Frutarom’s subsidiaries to transfer funds to Frutarom in the form of cash dividends, loans or advances that have had or are expected to have a material impact on the ability of Frutarom to meet its cash obligations.

Loans

Frutarom has arranged short-term and long-term loans from various banks and financial institutions to finance growth and strategic acquisition opportunities as they arise. Frutarom had total borrowings of $841.3 million as of March 31, 2018, $634.3 million as of December 31, 2017 and $533.8 million as of December 31, 2016. For further information on Frutarom’s borrowings, see Notes 9 and 14 to Frutarom’s audited financial statements included elsewhere in this prospectus.

Long-term liabilities (net of current maturities) mature in the following years after December 31, 2017 and December 31, 2016, respectively:

The average and effective interest rate on the loans in force was approximately 1.47% during the year ended December 31, 2017 and approximately 1.34% during the year ended December 31, 2016.

The exposure of Frutarom’s cash flows to interest rate changes is dependent on the Libor-Euro, Libor-Dollar, Libor-Swiss franc and Libor-Pound Sterling rates.

Due to the above, the fair value of current and non-current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values are based on cash flows discounted at the borrowings’ discount rate.

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The carrying amounts of Frutarom’s borrowings are denominated in the following currencies:

Frutarom’s long-term loan agreements contain financial and other restrictive covenants. Frutarom has committed to meet the following financial covenants:

As of March 31, 2018 and December 31, 2017, Frutarom was in compliance with its financial covenants.

Cash and Cash Equivalents

Classified by currency, Frutarom’s cash and cash equivalents were as follows:

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Capital Expenditure Commitments

As of December 31, 2017 and March 31, 2018, Frutarom did not have any material commitments for capital expenditures.

Research and Development

Frutarom considers its research, innovation and development system one of its key core proficiencies and channels substantial resources towards researching and developing new and innovative products. In many cases Frutarom initiates the development of fine ingredients after analyzing market trends and needs, while focusing on the development of products with higher profit margins in order to continue improving the product mix and ensure that its production capabilities and capacity are put to optimal use. Scientists from various disciplines work in project teams that include flavorists to develop new flavors whose qualities reflect consumer preferences. Most of Frutarom’s products, and natural products in particular, are tailor-made and customized in accordance with its customers’ needs.

Expenses for product development and research activities – net of participation from government departments and others were approximately $51.0 million, $44.4 million and $37.2 million for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, respectively.

Trend Information

Frutarom’s business is affected by certain trends in the food and beverages market, including: