IFF to buy Frutarom in US$7.1bn deal, seeks to create a global leader in taste, scent and nutrition
07 May 2018 --- International Flavors & Fragrances Inc. (IFF) has agreed to acquire Israeli flavors and ingredients company Frutarom in a cash and stock transaction valued at approximately US$7.1 billion, including the assumption of Frutarom’s net debt. By combining with Frutarom, IFF is seeking 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 move comes a few weeks after flavors and fragrances company Givaudan announced an agreement to acquire 40.6 percent of the shares of Naturex, the global leader in specialty plant-based natural ingredients.
The deal follows a series of acquisitions from Frutarom throughout last year, marking significant growth for the flavors and fragrances specialists. Last December, Frutarom Industries continued its acquisition roll by signing an agreement for the purchase of 51 percent of the shares of the Brazilian company Bremil Indústria Ltda, the top producer of savory solutions in Brazil, at a company value of approximately US$73 million. This marked the twelfth acquisition for Frutarom in 2017 and came just one day signed a deal to acquire Polish flavors & fragrances company Pollena-Aroma.
IFF and Frutarom report to having complementary customers, capabilities and geographic reach, and as such it is hoped the combination of the two will result in more exposure to fast growing end markets and an enhanced platform to deliver sustainable, profitable growth. The deal would also significantly enhance IFF’s exposure to the fast-growing small- and mid-sized customers, including private label. Approximately 70 percent of Frutarom’s sales are to these two customer groups. Frutarom has a strong track record of growth, with expected sales of above US$1.6 billion in 2018, and their previously announced target of US$2.25 billion in sales by 2020.
The combined company’s customers will have access to comprehensive and differentiated integrated solutions with increased focus on naturals and health and wellness, IFF reports.
“This transaction is a big win and a fantastic outcome for shareholders, customers and employees of both companies,” says IFF Chairman and CEO, Andreas Fibig. “Frutarom has an extremely attractive product portfolio, including broad expertise in naturals and diverse adjacencies with capabilities beyond our core taste and scent businesses. It also has significant exposure to complementary and fast-growing small- and mid-sized customers. By combining our deep R&D expertise with Frutarom’s, we are offering our customers a broader range of solutions and accelerating our growth strategy. We believe this combination will lead to faster and more profitable growth, enhanced free cash flow and generate greater returns for our shareholders.”
“Frutarom has had a fascinating journey of accelerated growth, far above our industry benchmarks through our investment in unique technologies and focus on natural products in the growing world of health and taste,” Ori Yehudai, President and CEO of Frutarom remarks.
“Today marks the culmination of a decades-long vision to become a global leader in taste and health. This combination provides great opportunities for both our dedicated employees and highly valued customers who will enjoy our combined technologies and global reach while maximizing value for our shareholders. Frutarom and IFF are committed to maintaining a presence in Israel, and I look forward to working with Andreas and the team to ensure a seamless integration of these two terrific companies,” Yehudai notes.
“This transaction represents a major milestone for Frutarom and opens the door to a new chapter of growth and shareholder value creation,” says John Farber, Frutarom Chairman of the Board and Chairman of ICC Industries Inc., Frutarom’s largest shareholder. “I am pleased to support this historic combination of two world-class companies and look forward to the next chapter of the IFF and Frutarom story.”
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