Frutarom acquires GewurzMuhle Nesse
Nesse is an international group producing innovative savory solutions including savory flavors, seasonings and specialty functional ingredients.
18/01/06 Frutarom Industries Ltd. has announced that it has acquired 70% of the shares of GewurzMuhle Nesse ("Nesse"), an international group having recorded revenue of Euro 21.4 million in 2004. The consideration for the acquisition is Euro 18.41 million plus a future success fee payment based on continued improvement in Nesse's future EBIT. The transaction includes a call and a put option, exercisable as of the end of 2007, to acquire the remaining 30%.
Founded in 1880, Nesse is a fast growing international group with 120 employees, two production facilities in Germany, and offices and representatives in 20 other countries, mainly in West and East Europe. The company produces innovative savory solutions including savory flavors, seasonings and specialty functional ingredients. The company's extensive customer base includes hundreds of food manufacturers mainly in West and East Europe.
Nesse has achieved remarkable and profitable double digit growth in the past few years. Sales have grown from Euro 14.4 million in 2001 to Euro 21.4 million in 2004 and are expected to continue growing at a double digit rate in 2005, while continuously improving profitability.
The consideration for the acquisition of 70% of Nesse's shares is Euro 18.41 million. The future success fee payment is based on continued improvement, to the extent achieved, in Nesse's EBIT in the years 2005-2007. The acquisition will be financed from Frutarom's own resources. Frutarom has a call option to purchase and the sellers have a put option to sell, for two years as of the end of 2007, the remaining 30%. The exercise price will be based on 30% of the average annual EBIT achieved by Nesse during the two years preceding the exercise of the option, multiplied by 6.5.
The savory flavors market (non sweet flavors) is growing fast at an annual rate of 4%-6% in developed countries and even more in emerging markets where Nesse is active. This growth is due to the changes seen in recent years in social habits and in consumer preferences, which have led to increased consumer demand for convenience foods consumed both in the home and outside of it. Frutarom's strategy is to develop its global savory activity as a strategic growth engine and to continually invest in developing new, added-value products at its sites around the world.
Frutarom's human resources are expected to benefit from the addition of experienced and efficient personnel at all levels. The Krause family-Nesse's owners and experienced managers-will continue to manage Nesse, as they have done successfully so far, and will also join Frutarom's global Flavors Division's management. Nesse's experienced R&D and sales and marketing personnel will join Frutarom's global infrastructure and will contribute to Frutarom's diverse activities and to extracting the most value from the integration.
Frutarom's sales for the first nine months of 2005 grew 36.7% compared with the same period in 2004 to reach US$ 191.2 million, while net profit grew sharply by 72.7% compared with the same period in 2004 to reach US$ 22 million.