Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; OTCBB:FRUTF) has bought 100% of the shares of US-based Grow Company Inc. for $20 million. The purchase agreement includes a mechanism for future consideration conditional on the company's business performance during the year following the purchase date. The transaction was financed through bank debt.
Frutarom has also announced that yesterday it completed its purchase of 75% of the share capital of Polish company AMCO Sp. z o.o., which specializes in unique savory flavor solutions.
Grow was founded in 1977. It has accumulated many years of know-how and unique biotechnological production methods for producing natural nutritious ingredients with healthy qualities that are scientifically-proven and backed up by clinical studies. These ingredients significantly improve the body's absorption of vitamins, minerals and other nutrients. Among its customers are leading dietary supplement, natural remedy, functional foods, cosmetic and flavors companies, and Grow has displayed impressive growth rates surpassing those of the markets in which it operates.
Frutarom says that Grow's unique technology and products strengthen its technological infrastructure and its portfolio of natural solutions for the food and health sectors and that it will work towards capitalizing on the many cross-selling opportunities arising from the acquisition and supporting the expansion of research, development and production of specialty natural solutions combining taste and health in response to consumer demand and the trends prevailing in the global food market calling for healthier and more natural food items. "This is a fast-growing area in which Frutarom's unique capabilities give it a solid competitive edge," the company's announcement says.
Grow has an R&D and marketing center and production site in New Jersey. The company's owners, and foremost among them the CEO who as a renowned researcher in this field with many years of experience also serves as its Chief Science Officer, will join Frutarom's managerial ranks in its Specialty Fine Ingredients Division.
Frutarom Group president and CEO Ori Yehudai said: "Over the past two years Frutarom has taken a major strategic step in strengthening its position as a leading global manufacturer of specialty fine ingredients. The acquisition of Grow blends in well with our rapid and profitable growth strategy, deepening and expanding Frutarom's activity in the growing field of natural specialty dietary supplements and the use of unique technologies in their manufacture. We will continue investing in significantly expanding our global activity in this important and growing field, both through strategic acquisitions and by collaborating with universities, research institutes and startup companies for developing innovative natural ingredients.
"The acquisition of Grow is our 29th acquisition in the past five years and carries on the implementation of our rapid and profitable growth strategy combining internal growth, above the rates of growth in the markets where we operate, with strategic acquisitions," Yehudai added, and continued, "We have an excellent pipeline of future acquisitions which will contribute, along with continued reinforcement of our market leadership in joining together the worlds of natural flavors and health, towards achieving the goals we recently set out: $2 billion in sales by 2020 along with an EBITDA margin of over 22% in our core activities."
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2016
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