Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; Pink Sheets:FRUTF) has acquired Flavor Systems International Inc. of the US for $35.3 million in cash. Frutarom will close the deal in a few weeks. This is the company's fifth acquisition so far this year.
Frutarom will also $6.5 million for Flavor Systems' new plant, which will become operational in the fourth quarter, and other real estate assets.
Cincinnati, Ohio-based Flavor Systems was founded in 1994. It develops and produces sweet and savory flavors for the food and beverages industry. The company's revenue was $18.4 million in the 12 months through July, compared with$16.5 million in 2010.
Frutarom said that the acquisition of Flavor Systems and its modern facility and R&D laboratories will give Frutarom access to growing market of flavored coffee and shakes and the US savory flavors markets, where it is not currently active. The company already has a strong position in the European savory market, achieved through acquisitions, including three so far this year. It added that the acquisition would also support the company's expansion strategy in Central and South America.
Frutarom will merge Flavor Systems with its current flavor operations on the East and West Coast, which are based on the acquisition of California-based Flavors Specialties Inc. for $17.2 million in 2009.
Frutarom president and CEO Ori Yehudai said that the acquisition of Flavor Systems would greatly expand the company's activities in the US, which is the world's largest flavor market, and supports the future strengthening and positioning of the company in the global market. He added, "We have an excellent acquisitions pipeline in both developed markets and developing countries, with special attention to Asia, Central and South America and Eastern Europe. Our strong capital structure, combined with credit lines from leading banks in the world will enable us to seek additional strategic acquisitions, aiming to multiply Frutarom's sales turnover again within the next four years."
Frutarom closed at $10.04 in New York yesterday, giving a market cap of $588 million, opens at $7/80 in London today, and rose 0.9% in morning trading on the TASE to NIS 29.96.
Published by Globes [online], Israel business news - www.globes-online.com - on September 13, 2011
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