Israeli flavors and fine ingredients company Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; OTCBB:FRUTF) has reported signing an agreement to buy 75% of Mexican savories solution company Piasa. Frutarom will assume the Mexican company's debt of $20.5 million. The deal includes the real estate housing Piasa’s main production site and headquarters in Monterrey.
This is Frutarom's eighth acquisition in 2016 as it pursues the rapid growth strategy that has made it one of the world's 10 largest companies in the field of flavors and natural specialty fine ingredients.
The purchase agreement includes a mechanism for future consideration based on Piasa’s future business performance, and an option for the purchase of the balance of shares beginning five years after completion of the transaction at a price contingent on the company’s future business performance. The deal is expected to be completed within the next several weeks and will be financed through bank debt.
Piasa Group's sales over the 12 month period ending September 2016 were about $45 million, with average annual growth of 8% over the past five years.
The acquisition of Piasa in Frutarom’s first acquisition in the Mexican market and its fifth in the Latin American market in the last four years.
Frutarom Group CEO Ori Yehudai said, "The acquisition of Piasa is the continuation of the implementation of Frutarom Group's rapid profitable growth strategy and the realization of its vision 'to be the preferred partner for tasty and healthy success.' This is an important strategic acquisition that provides Frutarom significant entry into the Mexican market, one of Latin America’s main markets and among the most important and fastest growing in the world. Piasa is a leader in Mexico’s savory solutions market and we intend to continue expanding its activity with the support of Frutarom’s global infrastructures and based on Piasa’s quality production infrastructure with its excess capacity as well as through exploiting cross-selling opportunities by offering Frutarom’s broad portfolio of solutions to Piasa’s Mexican customers and gaining new customers in the local market, along with expanding Piasa’s activity to those countries in the region where Frutarom already has a sales and marketing infrastructure in place."
Published by Globes [online], Israel business news - www.globes-online.com - on November 10, 2016
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