IFF’s Frutarom buy: “We’re ready for Day 1,” declares CEO as final antitrust hurdle is cleared

17 Sep 2018 --- Now that International Flavors & Fragrances Inc. (IFF) has received antitrust clearance from all relevant antitrust authorities around the world, and all antitrust and competition laws have been satisfied, Chairman and CEO Andreas Fibig says the company wants to build on its strong momentum, focus on integrating planning and “provide a seamless experience for customers.” Speaking to FoodIngredientsFirst, Fibig says that IFF is on track to close the transaction in early October, which is ahead of the company’s initial expectations.

“All antitrust and regulatory approvals have now been received and our integration planning team has been moving efficiently and thoughtfully to meet its targets,” he says. 

“We are ready for Day 1 and excited to move into this historic next chapter in the story of IFF.”

Late last week, IFF received final antitrust clearance from Russia, which was seen as the last hurdle. 

In May, IFF agreed to acquire the Israeli flavors and ingredients company in a transaction valued at approximately US$7.1 billion, including the assumption of Frutarom’s net debt. At the time, the company said the acquisition was expected to be cleared in six to nine month time and no real competition concerns were expected due to the complementary nature of the businesses.

Speaking about the initial strategy for the integration of the Frutarom business and what the early months might look like, Fibig says: “Our number one focus is to provide a seamless experience for our customers. This is our key message for every IFF employee.”

“Aside from this positive transition, we are excited by the opportunities for all our customers. Frutarom customers now gain the benefit of IFF’s industry-leading R&D and our outstanding ingredients and technology portfolios.”

“IFF customers will see their offerings expanded by Frutarom’s extensive naturals business, as well as the many fascinating adjacencies that we will have under our roof.”

“These expansions to into adjacencies represent our commitment to offering our customers more of what consumers desire – particularly in the area of natural taste, scent and nutrition.”

By combining with Frutarom, IFF wants to accelerate its Vision 2020 strategy to create a global leader in natural taste, scent and nutrition, as 75 percent of Frutarom’s sales are natural. 

The initial announcement of the IFF Frutarom acquisition came just a few weeks after leading flavors and fragrances company Givaudan began taking control of Naturex, the global leader in specialty plant-based natural ingredients. Givaudan has now taken complete control of Naturex, with a squeeze out process in motion. With this background, Fibig noted: “Speaking for IFF, these expansions to into adjacencies represent our commitment to offering our customers more of what consumers desire – particularly in the area of natural taste, scent and nutrition.“

In a previous in-depth interview with FoodIngredientsFirst Fibig dispelled suggestions that the US$7.1 billion was ushered in as a defensive response to Givaudan’s acquisition of Naturex, noting that the similar timings were “coincidental” and that talks with Frutarom had been ongoing for nine months. He said that IFF was not aware that Givaudan was closing on the Naturex deal and “it just happened by chance at the same time.”

You can read more from that interview here. 

Last month, Frutarom reported another record-breaking quarter and half-year, in sales, profit, and earnings per share. The accelerated increase in revenues this quarter stems from a combination of the rapid internal growth in Frutarom’s core activities – the Flavors Division and Specialty Fine Ingredients Division – and the acquisitions it has made. Frutarom sales in Q2 2018 rose 16.8 percent to a record of US$401.3 million, compared with US$343.6 million in Q2 2017, reflecting growth on a proforma and constant currency basis of 4.5 percent compared with Q2 2017. 

You can read more about Frutarom’s record Q2 here. 

At Vitafoods Asia last week, Frutarom Health Solutions highlighted a very bioavailable curcumin product. “We offer a liquid curcumin where the body gets it in a liquid form rather than a powder form. With that, the body is able to absorb it much better: in fact 185 times better when compared to the normal powder. Also because it is liquid it allows for application in a beverage. So we expand the possibilities from tablets and capsules into the food space, where you can get a very important health ingredient that is very trendy because the joint health is important, you get it in a liquid and form beverage. You are no longer taking a pill but rather a food item. We see this as very conducive to the Asian consumer who prefers food delivery systems. Curcumin is a product that works within hours. You can feel it almost immediately unlike some of our other products where it is more about preventative ingredients,” Raimund Hoenes, General Manager at Frutarom Health tells FoodIngredientsFirst. “We have a very new clinical study with our Echinacea product where we have much better results as our extract is much more complex than what you would normally get. We take the whole flower and condense it down into a powerful extract and we have now rebranded the product as Echishield to really highlight the fact that it shields you from the immunity challenges that you face,” he adds. 

The launches came as Frutarom’s acquisition by IFF draws ever closer. “If you look where IFF or the flavor industry, in general, is heading, it is going towards more natural solutions and we are just going towards natural solutions in taste and providing the health benefits as well. There are a lot of functional foods that are being developed that are also being developed by the existing consumer base of IFF (i.e., the bigger CPG companies) and I believe that some of our ingredients are also very suitable to be incorporated into foods. To be present at this connection between food and health is an interesting element that we can bring to the table. Our curcumin is a good example where you have the flavor system and you can add health. There are other products out there where we can really take a natural health ingredient and bring it into a food application. Opportunities are limitless,” Hoenes says.  

Also this week, Firmenich, the world’s largest privately owned company in the flavor and fragrance business, has entered into a strategic agreement with Layn Natural Ingredients to leverage sweetener formulation and distribution. You can read more on this here. 

By Gaynor Selby