International Flavors & Fragrances has emerged as a strong contender to purchase DuPont's nutrition division, challenging Kerry Group for the $25 billion asset.

Financial news agency Bloomberg said this is according to people with knowledge of the matter. 

IFF and Kerry are both negotiating with DuPont and the winner could reach a deal by the end of the year, the people said, asking not to be identified as the discussions are private. 

The transaction will create a new company comprised of the bidder's assets and DuPont’s nutrition business that will be spun off to existing investors, they added. 

DuPont shareholders will emerge from the so-called Reverse Morris Trust with a significant stake in the business, according to Bloomberg. 

The new company aims to have an investment-grade credit rating and its board will include directors from DuPont and the bidder, the people said. 

The transaction is likely to take at least a year to close, they said. 

Representatives for DuPont, IFF and Kerry declined to comment. 

Discussions between the companies are continuing and the deal may still fall apart, the people said.

DuPont, under Chairman Ed Breen and CEO Marc Doyle, opted for the most tax-efficient option to reward shareholders after the value of its nutrition business had wallowed below industry levels as part of a diversified company. 

The deal would be the biggest ever for IFF, which makes flavours and fragrances for food, beverages, personal care and household products. 

The company's last big acquisition was in the food-flavouring industry last year, when it bought Israel’s Frutarom Industries for $7.1 billion including debt.

Kerry Group has long wanted to expand in healthy bacteria strains, ingredients found in dietary supplements, cheese and bakery products, and nutritional products that claim to have some sort of role in assisting in disease treatment or prevention.