Enzymotec's management opposes Frutarom takeover

Ori Yehudai  photo: Eyal Izhar
Ori Yehudai photo: Eyal Izhar

Frutarom's offer to purchase may be accepted by Enzymotec's shareholders.

Management of Enzymotec Ltd. (Nasdaq: ENZY), led by new CEO Erez Israeli, has sent a letter to the company's investors asking them to refrain from making decisions at this stage about whether to accept the offer to purchase for their shares by Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT) at a company value of $260 milion.

At the same time, Enzymotec's management published a letter to Frutarom CEO Ori Yehudai calling the offer to purchase "opportunistic." Enzymotec noted that Yehudai had refused to meet with Enzymotec's management since submitting its offer on August 24, and complained about the "insulting" interview with Yehudai published in "Globes," in which he stated, "The company will not recover without a significant change," and that that Frutarom planned to replace the board of directors if its offer to purchase is accepted.

In its letter to Yehudai, the Enzymotec board of directors stated, "The board of directors of Enzymotec was disappointed to learn from your public announcements of Frutarom’s opportunistic intent to launch an offer for the shares of Enzymotec at a price of $11.50 per share. These announcements were not accompanied by any attempt to engage in a conversation or communication with the Company or its management.

"In contrast, as soon as we learned of your possible interest in our Company, prior to your announcement regarding a planned tender offer, our CEO, Erez Israeli, reached out to you, requesting a meeting. Your assistant responded that you were unavailable to meet until September 4, 2017.

"The Board was also taken aback by what we view as an inaccurate and gratuitously derogatory interview given by you to Globes on August 24, 2017. We do, however, fully agree with your comment that '… this is a company with big potential.' A growth strategy is in place and is being executed to realize this potential… We do remain available at your convenience, if you so choose, to discuss any topics that may be of interest to you, including our views as to the Company’s strategic plans and value."

Enzymotec's letter to the company's investors stated, "Enzymotec advises shareholders that they should not take any action at this time in response to Frutarom’s proposal and, even if a tender offer is launched, they should defer making a determination whether to accept or reject such tender offer until Enzymotec’s Board of Directors discloses its position with respect to the tender offer."

On Friday, Enzymotec's share price dipped on Nasdaq from $11.50, the exact price in the offer to purchase, to $11.35, a 1.4% decrease, following the publication of the company's announcement, pushing the company's market cap down to $259 million.

It appears that Frutarom has not yet published an official offer to purchase, because it wants to test the water first and obtain agreement in principle to the offer from the main shareholders in the company, before entering into direct talks with Enzymotec's management. The letters indicate that Enzymotec's management plans to be more involved in the process, which is currently taking place over its head.

Despite the opposition by Enzymotec's management, it appears that the offer to purchase is likely to be accepted by the company's shareholders.

Published by Globes [online], Israel Business News - www.globes-online.com - on September 3, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Ori Yehudai  photo: Eyal Izhar
Ori Yehudai photo: Eyal Izhar
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