Israeli flavors and natural specialty fine ingredients Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; OTCBB:FRUTF) announced today that it has signed an agreement for the purchase of 70% of the share capital of the Argentinian company Meroar S.A and its unit Meroaromas S.A. for $11.2 million. The agreement includes an option to buy the balance of Meroar's shares, form 3 years after completion of the transaction, at a price based on Meroar's business performance during this period. The transaction is expected to be completed over the coming months and will be financed through bank debt.
Meroar's revenue in 2017 was $ 7.4 million and the company reported, higher profitability rates than those of Frutarom's Flavors division, which it will be integrated with.
The acquisition is Frutarom's first major entry into the Argentinian market and will boost the Israeli companies already extensive Latin American activities. This is Frutarom's eighth acquisition in Latin America in the past 6 years.
Established in 1980, Meroar researches, develops, manufactures and markets flavors and fragrances. The group has a workforce of 40 employees and a manufacturing site in Buenos Aires with R&D and application labs, and separate production facilities for flavors and fragrances. Meroar has a broad portfolio of solutions, which includes fragrances for the cosmetics, personal care and household products industries, and flavors mainly for the beverage, sweets, baked goods and pharmaceutical industries.
The acquisition is the continuation of the implementation of Frutarom’s strategy to develop global activity in the field of fragrances, with an emphasis on emerging markets with high growth rates. In 2017 Frutarom acquired the Israeli company Turpaz, with development centers in the U.S. and the South of France, as well as the Polish company Pollena Aroma, which has a modern facility that will serve as the European center for Frutarom's growing fragrances activity, which were added to Frutarom’s minor existing fragrance business concentrated mainly in India, Africa and Latin America. Frutarom intends to continue to expand its activity in fragrances through the accelerated development of a global platform of knowledge and expertise, along with additional future acquisitions of small and medium sized fragrances companies.
Meroar's managers and founders will continue managing the activity and will become part of Frutarom's management structure in Latin America. They will also remain on as shareholders with 30% of the Meroar Group's capital equity.
Frutarom CEO and president Ori Yehudai said, "The Meroar acquisition constitutes a significant first entry for Frutarom into Argentina, and is yet another strategic acquisition of an activity in Frutarom’s core field which will enable us to offer our customers a broader range of innovative solutions, and an important step in implementing Frutarom’s strategic plan to develop a worldwide business of Fragrances, particularly in emerging markets with high growth rates.
He added, "The Meroar acquisition continues Frutarom’s implementation of its rapid and profitable growth strategy and the realization of its vision 'to be the preferred partner for tasty and healthy success'. This is our second acquisition this year, following 20 acquisitions in the past 2 years, and 37 acquisitions we have carried out since 2013, which have been successfully integrated into our global activity and have contributed, and will continue to contribute, to further growth in sales and improved profits and margins through maximum capitalization on the synergies they bring. We have an outstanding pipeline of further strategic acquisitions of companies and activities within the scope of our operations and we will continue carrying out our rapid and profitable growth strategy, which is based on combining profitable internal growth and strategic acquisitions, in order to achieve our recently revised targets of at least $2.25 billion in sales with an EBITDA margin of 23% in our core activities by the year 2020.”
Published by Globes [online], Israel business news - www.globes-online.com - on March 14, 2018
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