Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; Bulletin Board: FRUTF) has acquired Guatemalan flavors company Aroma SA for $12.5 million, plus milestone payments if its earnings before interest, taxes, depreciation and amortization (EBITDA) exceeds $2.25 million in 2013-15. The acquisition includes Aroma's plant in Guatemala.
Today's acquisition follows Frutatom's acquisition of 75% of Russia's Protein Technologies Ingredients Group (PTI), a maker of savory and seasoning compounds, for $50.3 million, earlier this month.
Aroma, owned by Panamanian company Aroma Corporation, develops and sells flavors for beverages, dairy products, confectionary, snacks and convenience food. Its customers include global food and beverage manufacturers as well as local food and beverage manufacturers in Central America and other emerging markets.
Frutarom is seeking to expand its business in Central and South America through organic growth and acquisitions. The acquisition of Aroma follows the acquisition of Brazilian flavor company Mylner in early 2012, and the establishment of Frutarom's own operation in Costa Rica, which includes a R&D lab and a sales and marketing unit. It will merge its Costa Rican operations with Aroma to create a development and production center for the region. Frutarom says the acquisition will enable it to strengthen its presence and increase its market share in the growing Central and South American markets, and expand its product range and R&D, sales and marketing capabilities. Ownership of a local production facility will help reduce production costs and improve services to customers in the region.
Frutarom president and CEO Ori Yehudai said, "The weight of revenue from developing markets has grown substantially from 27% in 2010 to 36% in 2012 and is expected to grow further in the wake of the three acquisitions in 2013. We consider the acquisition of Aroma as another strategic step to increase Frutarom’s market share in high growth markets in general and particularly in Central America, which Frutarom has identified as attractive markets that will contribute to future development. Frutarom plans to continue expanding in these markets through continued strengthening of its R&D, sales and marketing activities and its supply chain and by making additional strategic acquisitions, while reinforcing its position as a leading global player."
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2013
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