Israeli flavors and natural specialty fine ingredients company Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT) has acquired a 51% stake of Israeli company Turpaz Perfume and Flavor Extracts Ltd. at an overall cash-free debt-free company value of NIS 53.7 million ($15.1 million). This is Frutarom's seventh acquisition this year.
The consideration paid by Frutarom for the shares is NIS 14.5 million ($ 4.1 million), and in addition Frutarom has injected an investment of approx. NIS 27 million (approx. US$ 7.6 million) into the company. The agreement includes an option for the purchase of the remaining balance of Turpaz shares starting about four years from the date of completion of the deal at a price based on Turpaz’s business performance during the two years leading up to the date of notification on exercising the option. The deal was completed upon signing and financed through bank debt.
According to Turpaz’s management reports, revenue for the 12 months ending June 2017 was NIS 23.3 million ($ 6.2 million) with higher profitability margins than Frutarom’s Flavors division into which it will be consolidated.
Founded in 1970, Turpaz develops, produces and markets fragrance solutions. The company has 16 employees at an R&D, manufacturing and marketing site in Israel and recently opened an R&D, production, sales and marketing center in New Jersey. Turpaz has a diverse portfolio of products and solutions which are based on considerable know-how and experience, and a broad customer base, and has shown impressive growth rates in recent years while improving its profitability margin.
Frutarom president and CEO Ori Yehudai said, "The acquisition of Turpaz is an important step towards the implementation of Frutarom’s strategy to develop global business in fragrances. The field of fragrances is synergetic and complementary to the field of flavors in terms of, among other things, raw materials and production processes, and many players in Frutarom’s fields of activity engage in both flavors and fragrance activities together. Frutarom’s strong management is now solid enough and well enough established to develop this additional area of activity."
He added, “We see interesting and diverse growth opportunities for fragrances, especially in emerging markets, and the potential to perform acquisitions of companies with combined flavor and fragrance activities, including in countries where Frutarom is already active, with the potential to realize interesting operational synergies. The Turpaz acquisition is a continuation of the implementation of Frutarom’s rapid and profitable growth strategy.
Published by Globes [online], Israel business news - www.globes-online.com - on September 6, 2017
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