Acquisition Targets are Overpriced, Says Symrise CEO, Who Underscores Commitment to UK and US Market
15 Aug 2016 --- Acquisition targets in the flavors and fragrances market are overpriced in the current market amid fierce competition, according to Symrise chief executive director Heinz-Jurgen Bertram. Speaking to FoodIngredientsFirst, after reporting its first half results, Dr. Bertram said that Symrise is being thwarted from acquiring companies as fierce competition between rivals is pushing up the prices of companies.
He said: "We always look at the market for opportunities to round up our portfolio. We have done some smaller, bolt on acquisitions this year already."
"However, a lot of these opportunities are too expensive at this point of time. It is a market where everyone is looking for acquisitions. We just would do it if we see a value for both parties."
Symrise has made a number of bolt-on acquisitions since its made a significance purchase in the flavors and fragrance market in 2014, with its acquisition of French company Diana Group for $1.8bn.
The acquisition meant it closed the gap on its bigger rivals Givaudan SA and International Flavors & Fragrances (IFF).
Dr. Bertram said: “If you look back at what we did with Diana, everyone said that ‘it is too expensive’ and honestly that was the best deal in the industry which we did. We will stay very conscious on when we do deals. If there is a good opportunity, we will not shy away from it."
“We see that a lot of our competitors are now also following our strategy on looking beyond flavors and fragrances. Three years ago, everyone said cosmetic ingredients has nothing to do with fragrances and now this has totally changed.”
“You see a lot looking in cosmetic ingredients and have done some acquisitions. We keep saying the best time in doing it was three years ago, when we were the first ones doing this move and the opportunities where clearly there. And now times are difficult so that clearly has changed."
Last week, Symrise reported a sales lift of 16 percent to €1.46bn ($1.62bn) in the first half of the year, helped by strong demand for savory and beverage ingredients.
Profits were up by eight percent to €323m ($360m) in the period at the German company, helped by a steady performance across its Flavor and Nutrition division, its biggest division in terms of sales.
Dr. Bertram said that Symrise remains committed to the UK and US, following Brexit and any political changes in the US.
The German flavors and fragrances company has a significant presence in the US after buying Pinova Holdings, the US maker of perfume ingredients from natural sources for the food and beverage industry around $400m last year.
He said: "Our commitment to the US has not changed. We trust in the footprint but also in the stability of the market in the US to remain resilient. We have a long term-commitment to the US. As a consequence of some elections, our commitment and our long-term view on certain markets will not change.”
Likewise, Bertram underscored the company’s commitment to the UK.
Bertram said: "Our business in the UK as a total part of our business is less than three percent. However we do have significant production in the UK and we do not expect that to be impacted at least not in the short to mid-term. Our commitment to the UK and to expand there has not changed at all."
“It's not totally clear what the results of the negotiations concerned with Brexit will be. Despite that, we are not concerned about our business and our commitment to the UK has not changed and will not change," he concluded.
by John Reynolds
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