Delek Group Ltd. (TASE: DLEKG) subsidiary Gadot Biochemical Industries Ltd. (TASE:GDBC) wants to acquire a company in the US or Europe this year. The company reportedly plans to spend tens of millions of dollars on the acquisition, which is expected to greatly boost the company’s sales. Delek owns 64% of Gadot Biochemical.
Gadot Biochemical currently has a market cap of NIS 370 million, and had NIS 24.7 million in cash at the end of September 2005. The company posted a net profit of NIS 40 million on NIS 276 million in sales in January-September 2005.
Gadot Biochemical manufactures ingredients and fine chemicals for the food and beverage, cosmetic, detergent and pharmaceutical industries, and is considered a global leader in its field. Based near the Kishon River in Haifa, the company has been in business since 1962. The company went public at a company value of NIS 380 million in May 2005.
Gadot Biochemical’s customers include some of the world’s leading food companies The company’s core product, citric acid has suffered from falling global prices in recent years, due to a surge in production capacity. The company quickly changed its strategy, marking as growth sources several added value products related to the production of citric acid, such as crystalline fructose and Tri-Sodium Citrate.
The main growth engine marked by Gadot Biochemical is mineral fortifiers, which are also produced from citric acid, especially calcium citrate, calcium phosphate, magnesium citrate and zinc citrate. These products account for 7% of the company’s revenue, compared with 38% from crystalline fructose, 40% from Tri-Sodium Citrate, and 15% from citric acid.
Gadot Biochemical VP marketing Ronny Hacham said this breakdown was expected to change substantially in the coming years in favor of fortifiers for the health food industry. These sectors have higher entry barriers. In December 2005, Gadot Biochemical won the Frost & Sullivan 2005 Product Differentiation Innovation Award for the company’s efforts to strengthen its market presence by developing a successful mineral line.
Published by Globes [online], Israel business news - www.globes.co.il - on January 12, 2006