Israeli flavors and specialty fine ingredients company Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; OTCBB:FRUTF) is continuing its global spending spree as part of its growth strategy. The company announced today that it has signed an agreement for the acquisition of Unique Flavors (Pty) Limited of South Africa for $6.7 million (including the debt it has assumed). The purchase agreement includes a mechanism for additional payments based on business performance. The transaction was completed upon the signing of the agreement and was financed through bank debt.
Unique’s sales in the 12 months ending January 31, 2017 were about $9 million. Founded in 2001, Unique develops, produces and markets flavors, with emphasis on savory flavors (the non-sweet spectrum of flavors) and on sweet taste solutions.
Unique has an R&D, production and marketing site in Pretoria, near Frutarom’s new South African site, and a wide customer base in South Africa and other important emerging markets of Sub-Saharan African including Ghana, Malawi, Zimbabwe and Mozambique. Unique has 64 employees and its activity is synergetic to Frutarom’s flavors activity in Africa, which has grown in recent years at a substantial pace surpassing the rate of market growth.
Frutarom will merge operations, including R&D, sales and marketing, purchasing, production and supply platforms. The management of Unique, headed by the activity’s CEO, will be integrated into Frutarom’s management in Africa, and together they will work towards accelerating Frutarom’s growth in the region.
The acquisition of Unique is Frutarom’s second acquisition in Africa and follows the acquisition in 2013 of the flavors company JannDeRee which was successfully integrated with Frutarom’s South African activity. In recent years Frutarom has also made efforts at expanding its activity in Africa on the basis of its manufacturing infrastructure and its local and global R&D and marketing capabilities while capitalizing on the synergies generated by the acquisition that had been made. Last year Frutarom inaugurated a modern state-of-the-art production plant and R&D center in Johannesburg, South Africa to serve the growing markets of the region.
Frutarom president and CEO Ori Yehudai said, "The acquisition of Unique is the continuation of the implementation of Frutarom's rapid and profitable growth strategy and the realization of its vision 'to be the preferred partner for tasty and healthy success.' The acquisition will contribute towards significantly strengthening our positioning in the rapidly growing regions of Africa, expanding the supply of our products to African countries and reinforcing our management and our R&D, production, sales and marketing capabilities.
He added, "We are working on seeking out and executing additional acquisitions of companies and activities in our fields of activity, with special focus on high-growth markets in Asia, Central and South America, Central and Eastern Europe and in Africa, with the share of our sales in emerging markets having grown from 27% in 2010 to over 40% in 2016. We will continue carrying out our rapid profitable growth strategy, which is based on combining profitable internal growth and strategic acquisitions, in order to achieve the targets we recently set: sales of at least US$ 2 billion with an EBITDA margin of over 22% in our core activities by the year 2020.”
Published by Globes [online], Israel business news - www.globes-online.com - on February 9, 2017
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