10 May 18 IFF’s takeover of Frutarom: creating a global flavours and natural ingredients empire
As the dust settles on the International Flavours & Fragrances (IFF) and Frutarom $7.1bn deal, all eyes are on the flavours and fragrances industry as the takeover is expected to shake up the sector when the company goes up against current market leader Givaudan.
IFF is broadly on par in revenues with Germany’s Symrise with €3.bn in expected 2018 sales and unlisted Firmenich of Switzerland.
Consolidation within the flavours and fragrance industry has been on the cards since Givaudan agreed to acquire 40.6 percent of the shares of Naturex, the global leader in specialty plant-based natural ingredients in March.
There have also been previous reports in Israeli media that Frutarom had attracted takeover interest.
And IFF’s takeover of Israeli-based Frutarom demonstrates how consumer preferences for smaller brands featuring natural products that tap into health and wellness trends are driving the flavour and fragrance market.
The two companies are projected to have combined revenue of $5.3-billion in 2018.
IFF’s takeover will also be the second largest of an Israeli company after Intel’s $15-billion acquisition of Mobileye.
Frutarom’s 20,000 products are sold to more than 10,000 customers, in 120 countries around the world and The Frutarom Group has 1,900 employees worldwide, with manufacturing facilities located in Europe, North America, Israel and Asia.
But it is the rapid growth of the company that has attracted such attention as well as its attractive product portfolio, including broad expertise in naturals.
Frutarom has been gaining serious momentum over the last couple of years as the company completed a series of acquisitions that mark significant growth for the flavours and fragrances specialists.
Last December, Frutarom Industries signed an agreement for the purchase of 51 percent of the shares of the Brazilian company Bremil Indústria, the top producer of savoury solutions in Brazil, at a company value of approximately $73-million.
This was the twelfth acquisition for Frutarom in 2017 and came just one day signed a deal to acquire Polish flavours & fragrances company Pollena-Aroma.
Once the deal is completed, IFF’s shares will be listed for trading in New York as well as trading on the Tel Aviv Stock Exchange. Expectations are for the transaction to close in six to nine months.
According to IFF’s “compelling strategic rationale”, the takeover will establish an industry leader in natural taste, scent and nutrition, as 75 percent of Frutarom’s sales are natural.
The company says the deals also creates a differentiated portfolio and enhances capabilities.
In addition to IFF’s and Frutarom’s highly complementary flavour capabilities, Frutarom’s portfolio creates opportunities to expand into attractive and fast-growing categories, such as natural colours, enzymes, antioxidants and health ingredients.
The combined company’s customers will have access to a comprehensive portfolio with more integrated solutions and Frutarom significantly enhances IFF’s exposure to the fast-growing small- and mid-sized customers, including private label.
Approximately 70 percent of Frutarom’s sales are to these two customer groups, says IFF.
Source: FoodIngredientsFirst.com; Reuters
Watch: Andreas Fibig and Ori Yehudai announce IFF to combine with Frutarom…