Frutarom acquires Polish flavors and fragrances company Pollena-Aroma
20 Dec 2017 --- Frutarom continues its momentum of acquisitions and the implementation of its rapid and profitable growth strategy by signed an agreement for the purchase of 99.96 percent of the shares in the Polish company Pollena-Aroma Sp, z.o.o. for approximately US$8.5 million (approx. €7.2 million). The transaction was completed upon signing and financed from independent sources and is the company’s eleventh acquisition this year.
The acquisition is the continuation of the implementation of Frutarom’s strategy to develop global activity in fragrances, with emphasis on high-growth emerging markets. In this framework, in 2017 Frutarom acquired Turpaz in Israel which joined Frutarom’s minor existing fragrance businesses concentrated mainly in India, Africa and Latin America. The fragrance field is synergetic and complementary to the field of flavors with respect to raw materials and production processes, among other things. Many players in Frutarom’s fields of activity conduct flavor and fragrance activities in parallel.
Mr. Ori Yehudai, President and CEO of Frutarom Group, said: “This is another strategic acquisition of activity in Frutarom’s core field which will enable us to offer our customers a broader portfolio of solutions, and an important step in implementing Frutarom’s strategic plan to develop worldwide business in fragrances. The field of fragrances is synergetic and complementary to the field of flavors with respect to raw materials and production processes, among other things, and many players in Frutarom’s fields of activity carry out parallel flavors and fragrances activities.”
“We see interesting and diverse growth opportunities for fragrances, especially in emerging markets, and the potential to perform acquisitions of companies with combined flavor and fragrance activities, including in countries where Frutarom is already active, with the potential to realize interesting operational synergies. In the past, we would forgo opportunities to acquire companies whose main activity was fragrances and with just a smaller amount in flavors. In the framework of our strategic decision to develop a global fragrances business, we can now move ahead with such acquisitions as well, like Pollena-Aroma, and we have an interesting pipeline of further acquisitions in the field of fragrances which we are pushing forward,” he explains. “The acquisition also provides further reinforcement for our growing activity in Poland and neighboring countries where Frutarom holds a leading position in flavors.”
Pollena-Aroma, established in 1956, engages in the development, production and marketing of flavors, fragrances and specialty ingredients for the aromatherapy and natural cosmetics industries. Pollena-Aroma holds a leading position in Poland’s flavors and fragrances market as the former leading Polish government company in this field which underwent privatization in the early 1990s. Pollena-Aroma has 64 employees, including highly educated scientists, flavorists and perfumers with extensive experience in the industry, and a large customer base in Europe, particularly in Poland and Ukraine. According to Pollena-Aroma’s managerial reports, its sales turnover in the 12 month period ending September 2017 totaled approx. US$5 million (approx. €4.5 million).
The worldwide market for fragrances was estimated in 2016 at US$13.2 billion (greater than that of flavors which are estimated at US$11 billion), amid projections of sales in the flavors and fragrances markets growing at an annual rate of 3 percent between 2015 and 2020. According to these projections, the rate of growth in emerging markets like Asia, Central and South America, Eastern Europe and Africa is expected to be higher as a result of evolving consumer preferences in these markets and rising standards of living and disposable income, and could reach an average annual rate of 5.1 percent from 2015 to 2020.
In conclusion, Yehudai said: “The acquisition of Pollena-Aroma continues Frutarom’s implementation of its rapid and profitable growth strategy and the realization of its vision "to be the preferred partner for tasty and healthy success." This is the eleventh acquisition we have made this year, following 29 acquisitions we have carried out since 2015 which have been successfully integrated into our global activity and have been and will continue contributing to further growth in sales and improved profits and margins through maximum capitalization on the synergies they bring.”
“We have an outstanding pipeline for further strategic acquisitions of companies and activities within the scope of our operations and we will continue carrying out our rapid and profitable growth strategy, which is based on combining profitable internal growth and strategic acquisitions, in order to achieve our recently revised targets of at least US$2.25 billion in sales with an EBITDA margin of 23 percent in our core activities by the year 2020.”
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