Frutarom Industries (TASE:FRUT) today announced the completion of its acquisition of the fruit preparations business in Germany and Switzerland of International Flavors & Fragrances Inc. (IFF), which was announced in May this year.
The acquired fruit preparations business, includes activities conducted at the modern plants in Emmerich, Germany and Reinach, Switzerland, as well as related inventory and intellectual property. IFF's Fruit Preparations business in Europe recorded revenues of $ 90 million in 2003, of which approximately 70% was in Germany and Switzerland.
Depending on the satisfactory completion of IFF's consultation with the employees work council in Dijon, France, Frutarom will acquire the fruit preparations business in France.
The fruit preparations business develops and produces unique compounds of fruit and other natural ingredients used as natural flavor materials in a wide range of food products such as dairy, bakery, etc.
The purchase price of the business acquired in Germany and Switzerland is €30 million ($36.5 million), less certain liabilities assumed by Frutarom.
The purchase agreement also provides an earn-out mechanism based on the results of the acquired business in 2005 and 2006, which allows for an increase or decrease of the purchase price of up to an aggregate of €3.5 million.
"Completing this acquisition is another significant milestone and brings Frutarom closer to its target: to achieve a sales turnover of $300 million and become one of the ten largest, leading multinationals in the flavor and fragrance industry," said Frutarom group president and CEO Ori Yehudai.
"This acquisition continues to fulfill Frutarom's strategy in recent years to grow rapidly through both fast organic growth of core activities and strategic acquisitions."
Yehudai added that the acquired activity is expected to contribute significantly to the group's sales turnover, as well to profit. "Frutarom intends to use this acquisition to leverage and strengthen its position as a leading global supplier to the food industry, offering natural, comprehensive solutions to leading food manufacturers, including a wide and innovative range of products for the functional food industry. The acquisition is also expected to strengthen Frutarom's activity in the field of savory flavors."
This acquisition, coupled with the acquisition of Emil Flachsmann AG (the Swiss company) last year, will expand the Frutarom group's existing customer base and add, many customers who are among the leading multinational food manufacturers in their field, mainly in the Western European market. The fruit preparations acquisition includes activity in countries where Frutarom has been less active, such as Spain, Italy and Norway, as well as North Africa. Frutarom plans to expand the West European activity in the fruit preparations field to other areas such as North America, East Europe and East Asia.
Once union negotiations are compelte, and the acquisition of the French business goes forward, Frutarom intends to transfer the French fruit preparations manufacturing activity to the plants acquired in Germany and Switzerland, in order to reduce costs
The research, development, sales and marketing activity that serves the French market will remain in France, where Frutarom intends to considerably expand its activity.
Last week, Frutarom announced record results for both the second quarter and first half of 2004. Frutarom's net profit for the first half of the year was $9.3 million on sales of $88.5 million.
Published by Globes [online] - www.globes.co.il - on Wednesday, August 18, 2004