Frutarom Acquires Aromco for $25 Million

Acquiring Aromco will enable Frutarom to broaden its activity and market share in these developing markets, which enjoy high growth rates, as well as to strengthen its current product supply chain.

Aug 22 2011 --- Frutarom Industries Ltd., a top-ten company in the Flavors and Specialty Fine Ingredients markets, reports an acquisition of 100% of Aromco Ltd. for USD 25m (GBP 15m) in cash. By this transaction, Frutarom completed its fourth acquisition of flavors companies since the beginning of 2011. In H1 2011, Frutarom completed three acquisitions of savory activities in Europe: the savory activity of the Norwegian company Rieber & Søn, the assets and activity of UK Company EAFI and the assets and activity of Christian Hansen Italia.

Aromco develops, manufactures and markets flavors for the Beverage, Dairy, Confectionary, Bakery and Savoury markets with annual sales turnover growing impressively in recent years and achieving USD 13m (GBP 7.7m) in 2010. Aromco's owner, Keith Brown, founded the acquired company in 1985 focusing on business development and penetrating into developing markets with high growth potential in Eastern Europe, Africa and Asia as well as building a market share in the UK.

Acquiring Aromco will enable Frutarom to broaden its activity and market share in these developing markets, which enjoy high growth rates, as well as to strengthen its current product supply chain. Additionally, Frutarom will utilize Aromco’s extensive and excellent Innovation activities in flavor creation, development and application. Aromco's existing efficient operational activity in England, employing 40 people, will be used to strengthen the merged activities using Frutarom’s Global organization giving operational and cross selling synergies.

Ori Yehudai, Frutarom’s President and CEO commented: "The acquisition of Aromco, which is active and growing extensively in developing markets, compliments our strategy and strengthens our presence and market share. Aromco's activity in the UK market will be merged with Frutarom's existing successful activity in which Frutarom is already considered a leading player. We will strive to maximize the numerous synergies among the different activities of Frutarom by utilizing the operating synergies in the different countries to accelerate the cross-selling opportunities and to achieve significant efficiencies and savings. The acquisition enriches Frutarom with a skilled and experienced Research and Development team which will contribute to expanding our existing product and technology range enabling an enhanced offering to our customers.”

Ori Yehudai added that "Aromco's acquisition was the fourth completed since the beginning of 2011 and it continues the realization of our strategy to integrate internal profitable growth with strategic acquisitions to double the sales turnovers within the next 4 years. We are convinced that the current acquisition will contribute to Frutarom's rapid growth and profitability and will produce high value to our customers, employees and investors.”

Yehudai concluded by saying "Frutarom will act to locate and to carry out additional strategic acquisitions of companies and activities in its chosen markets. We strive to continue the realization of the excellent pipeline of acquisitions in developed markets in the United States and Western Europe and developing countries focused on Asia, Central and South America and Eastern Europe. Our stable capital structure combined with world leading banks credit lines will enable us to continue carrying out additional strategic acquisitions.”

Last week Frutarom enjoyed continued growth in H1 along with the successful completion of three acquisition strategies.

Frutarom reported 14.3% revenue growth over Q2 2011 reaching US$ 130.6 M, as compared to sales of US$ 114.3 M in the same quarter last year, which was exceptionally strong and was characterized by strong growth as a result of the recovering global economy and the resulting restocking trend. The growth in sales in Q2 2011 derived from the contribution of the successful acquisitions that were completed during the first half of the year and which strengthened Frutarom's presence in the European Savory market. The strengthening of European currencies and the Israeli Shekel against the US dollar also contributed to the growth in sales. In local currency terms, 3.3% growth in Frutarom's sales was achieved in comparison to the same quarter last year.