Frutarom announces acquisitions in Poland, Brazil

Ori Yehudai  photo: Eyal Izhar

Frutarom has now made 12 acquisitions over the past year.

Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; Bulletin Board: FRUTF), which operates in the flavors and natural specialty fine ingredients sector, continues to swallow up companies worldwide at a rapid pace. The company, which recently completed its acquisition of Enzymotec for $270 million, today announced its acquisition of two more companies.

The first deal is for full ownership of Polish company Pollena-Aroma for $8.5 million. The deal was completed when it was signed, and will be financed from Frutarom's cash.

Pollena-Aroma, which was founded in 1956, develops, manufactures, and markets unique flavors, perfume extracts, and raw materials for the aromatherapy and natural cosmetics industries. It sales over the past 12 months totaled $5 million.

The second and much larger deal is the acquisition of a 51% stake in Brazilian flavors company Bremil for $31 million (103 million Brazilian reals). The agreement includes an option for acquiring the rest of Bremil's shares, starting five years after the date on which the deal is completed, at a price based on the Bremil's business performance during this period. Completion of the deal, which will be financed with a bank loan, is slated for the early months of 2018.

Bremil was founded in 1987. Its savory products are designed mainly for the convenience food, fast food, and processed meat markets. The company has 250 employees, and serves 450 customers in Brazil and other countries in the region, with a substantial presence among the leading beef product manufacturers. It has two production sites in southern and central Brazil with significant surplus production capacity, and Frutarom plans to utilize this surplus capacity to increase its output and growth in Brazil and other countries in the region.

Bremil's revenue totaled $47 million (150 million reals) in the 12 months ending in October.

The new acquisitions are Frutarom's 11th and 12th since the beginning of the year. The acquisition of Bremil will be Frutarom's fourth in the Brazilian market and its seventh in Latin America in the past five years. After it is completed, Frutarom's sales in this territory will account for 15% of its total revenue.

Frutarom's share price was up 1.5% today, and has risen 50% over the past year, increasing the company's market cap to NIS 18 billion.

Frutarom's revenue totaled $1 billion in the first nine months of the year, 16.5% more than in the corresponding period in 2016, so its two latest acquisitions are not regarded as material.

Frutarom CEO Ori Yehudai said today, "We are searching for additional strategic acquisitions of companies and activities in our spheres of activity, with a special emphasis on markets with rapid growth and natural flavors and health products. We have a strong pipeline of potential strategic acquisitions. We will continue implementing our rapid growth and profit strategy, based on a combination of profitable internal growth and strategic acquisitions, for the purpose of achieving the targets we recently set - sales of $2.5 billion, with a 23% EBITDA rate in our core activities, by 2020."

Published by Globes [online], Israel Business News - - on December 20, 2017

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

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