Foreign firms reportedly eye Israel’s flavorings maker Frutarom

Foreign firms reportedly eye Israel’s flavorings maker Frutarom

Shares of Haifa-based firm jump after Calcalist website names US company International Flavors & Fragrances as one potential buyer

A Frutarom R&D lab in Germany (Courtesy)
A Frutarom R&D lab in Germany (Courtesy)

Israel’s Frutarom, a maker of flavors and fragrances for use in food, beverages and pharmaceuticals, has become an acquisition target as the flavors sector undergoes consolidation, the Calcalist financial website said on Wednesday.

Shares of Frutarom were trading 9.3 percent higher at 10:21 a.m. in Tel Aviv, bringing its market value to NIS 21 billion ($5.9 billion).

Any deal for the acquisition of the Haifa-based firm, whose shares have surged some 64 percent in the past 12 months and which posted record sales of $1.36 billion in 2017, would value the firm at $6 billion to $6.5 billion, Calcalist said, without saying where it got the information.

The financial website said US firm International Flavors & Fragrances (IFF), the second-largest food flavorings and fragrance maker in the world, is interested in buying the Israeli firm and is expected to start acquisition talks in coming weeks. In 2008, IFF acquired Israeli food flavorings maker Aromor of Kibbutz Givat Oz in the Lower Galilee.

The acquisition of Frutarom would make IFF the largest flavors company in the world, Calcalist said. Frutarom, managed by Or Yehudai, is the sixth-largest food flavorings maker in the world.

The fruit of prickly pears (sabras), one of the ‘raw materials’ used by flavoring and fragrance companies to enhance hundreds of food and consumer products (Photo credit: Anna Kaplan/ Flash90 )

Calcalist did not name a second buyer, but TheMarker website said that German company Symrise was the other company interested in buying Frutarom.

The flavors and fragrances market has seen consolidation in the past few years. Last month Geneva-based Givaudan said it would buy French natural ingredients group Naturex.

In a statement to the Tel Aviv Stock Exchange, Frutarom said that “from time to time” it studies strategic steps, and holds talks about them, including those of a merger or acquisition. “It should be emphasized that there have been no accords reached between the company and any entity regarding a deal and there is no certainty that the talks will lead to a deal and what its terms may be. The company continues to be focused on its business targets.”

Calcalist said that people familiar with the Israeli firm confirmed they had received acquisition offers from a number of parties in the past few weeks, but there are no negotiations for a sale at the moment with any of the parties.

Frutarom has production plants and development centers globally, including in the US, Canada, the UK, Ireland, China and Morocco. The firm markets and sells over 70,000 products to 30,000 customers in over 150 countries and employs some 5,600 people worldwide.

The company has been growing via an aggressive acquisition strategy. It made 12 acquisitions in 2017, eight in 2016 and two since the beginning of 2018, according to data provided by the company. It has made 39 acquisitions in the past five years.

Frutarom was founded in 1934 and went public on the Tel Aviv Stock Exchange in 1997.

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