Frutarom makes fifth acquisition of 2016

Flavoring and ingredient firm Frutarom this week announced its fifth acquisition of 2016.

The Haifa-based company that is now the world’s seventh largest in the field of flavors and natural specialty fine ingredients got a little bigger Monday, as it announced that it was buying out Germany’s Extrakt Chemie.

Frutarom paid $6 million for the company (including its plant in Stadthagen, about 100 miles south of Hamburg), and assumed the company’s debt of $2.2 million.

Paying that debt off should not be a problem; last year, Extrakt Chemie booked revenues of about $10 million, and is a top supplier of flavorings to the pharmaceutical industry. Established in 1969, the German firm is well-known in the industry for its expertise in producing flavorings and ingredient extracts for pharmaceuticals, natural medications, nutritional supplements, foods and cosmetics, said Frutarom. Among its products are plant-sourced enzymes used as raw materials in pharmaceuticals that aid in the treatment of liver diseases, digestive problems and the prevention of infections, the Israeli firm said.

Extrakt Chemie has a staff of about 35 employees, and many of them will remain on board, continuing to work at the Stadthagen plant, the company said. The company’s current managerial staff, including its CEO, vice presidents, and technology department heads will join Frutarom in a managerial capacity as well.

Extrakt Chemie is Frutraom’s fifth acquisition so far this year. In 2015, Frutarom acquired 12 companies – meaning that on average, the company has bought one new company in each of the last 17 months.

While there are many candidates for the title of next Israeli billion dollar company, Frutarom has a better chance of pulling that off than any other Israeli firm. Established in 1933, Frutarom offers a total of some 31,000 products, which are sold to more than 15,500 customers in 145 countries around the world – including Algeria, Kuwait and the United Arab Emirates, via its Flachsmann A/S subsidiary. Now part of an international holding group, ICC Industries, the company is still headquartered in Haifa, and made a profit of $63.6 million on revenues of $873 million in 2015, 6.5% more than the previous year’s.

Lest one think that producing flavors and fragrances is an “old tech” industry, Frutarom operates nearly 50 state-of-the-art research and development firms around the world, where top scientists in the chemical and flavoring industry come up with new ways to impart the tastes that marketers have determined customers crave. Along with the R&D labs, Frutarom operates over 80 sales and marketing offices throughout the world, along with almost 40 production facilities in Europe, North America, Israel, Asia and South Africa. Overall, the company has nearly 3,500 employees.

And Frutarom is nowhere near the end of its list of companies it is looking to acquire.

“The acquisition of Extrakt Chemie is the 30th acquisition we have made in the past five years and the fifth we have completed since the beginning of 2016 in continuing the implementation of our rapid and profitable growth strategy combining strategic acquisitions with internal growth surpassing the rates of growth in markets in which we operate,” said Ori Yehudai, Frutarom CEO. “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 of $2 billion in sales by 2020.

“The acquisition of Extrakt Chemie is a natural continuation in the strengthening of our global infrastructure for natural ingredient extracts while diversifying and broadening our production capacity and capabilities in the field of pharma and natural medications,” added Yehudai. “We will continue investing in significantly expanding our global activity in this important and growing field, both through strategic acquisitions and research and development, and by creating partnerships with knowledge centers specializing in innovative natural ingredients.”