After reporting on Thursday that it had bought 60% of Indian company Sonarome Private Ltd, this morning, food flavorings company Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; OTCBB:FRUTF) announced the acquisition of 95% of Canadian company Investissements BSA for 42.75 million Canadian dollars cash (about NIS 36.5 million).
The purchase agreement includes an option to buy the rest of the shares in Investissements BSA in two years' time at a price dependent on the performance of Investissements BSA's business. Frutarom adds that the purchase will be financed by bank debt and that the consideration will be paid in the coming seeks.
Investissements BSA has a factory in Montreal, and employs about 140 people. Its main activity is the development, production and sale of savory flavor solutions, including seasoning blends and functional ingredients for the food industry, with particular focus on the areas of processed meats and convenience foods. BSA's sales in 2014 (for the 12 months ending Aug. 2014) were approximately CA$ 37 million.
In addition to its North American operations, in recent years BSA has developed an operation in India in which it holds a 90% stake, with 10% owned by a local partner who manages its activity. The company in India has local production facilities and supplies customers in the Indian market with savory flavor solutions, and also assists the group in procuring raw materials in source countries.
Frutarom says it considers the field of savory flavors an important strategic growth engine, and in 2006 it began substantially expanding in this field through the acquisition of the savory activities of the Nesse group, Gewurzmueller and Christian Hansen in 2006, 2007 and 2009 respectively, the acquisition of EAFI and the savory activities of Rieber and of FSI in 2011, the acquisition of Savoury Flavours in 2012, the acquisition of 75% of the Russian company PTI in 2013, and the acquisition of FoodBlenders in 2015. It says the activity of BSA is synergetic to a large extent with Frutarom's global savory activity and will enable Frutarom to reinforce its supply of products in the field of savory and to continue expanding and deepening its activity and market share in Canada, North America and in India.
Marcel Baril, who founded BSA in 1986, and the four partners currently running BSA, will continue in their management roles with the company, with some of them as shareholders as well.
Ori Yehudai, President and CEO of Frutarom Group, said: "The acquisition of BSA is the continuation of Frutarom Group's implementation of its rapid growth strategy and the realization of its vision 'to be the preferred partner for tasty and healthy success.' This is an important and significant strategic acquisition that solidifies Frutarom's position as one of the world's top companies for flavors, and reinforces its presence and standing as a leading global producer of savory solutions. Until now Frutarom has already enjoyed market leadership for savory solutions in Europe, and the acquisition of BSA is expected to boost its position in this field in North America and India as well. We are continuing to implement our rapid and profitable growth strategy. The acquisition of the BSA group is the fifth acquisition we have executed this year and we continue to search out and perform further strategic acquisitions of companies and operations in our fields of activity, with special focus on activities and markets exhibiting high rates of growth."
Published by Globes [online], Israel business news - www.globes-online.com - on May 17, 2015
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