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Frutarom completes acquisition of IFF's fruit preparations business in Germany and Switzerland
Continues to implement rapid growth strategy
Tel Aviv (ots) - One week after reporting a nineteenth consecutive quarter of growth and improved results, Frutarom Industries Ltd. (TASE: FRUT) today announced the completion of its acquisition of the fruit preparations business in Germany and Switzerland of International Flavors & Fragrances, Inc. ("IFF") (NYSE: IFF), which was initially announced in May this year. The acquired fruit preparations businesses, include activities conducted at the modern plants in Emmerich, Germany and Reinach, Switzerland, as well as related inventory and intellectual property. IFF's fruit preparations business in Europe recorded revenues of US$ 90 million in 2003; the businesses in Germany and Switzerland comprise 70% of the European fruit preparations business. IFF is engaged in a consultation process with the employee works council in France regarding the proposed purchase by Frutarom of the fruit preparations business in France.
The fruit preparations business develops and produces unique compounds of fruit and other natural ingredients used as natural flavor materials in a wide range of food products such as dairy, bakery, etc.
The purchase price of the business acquired in Germany and Switzerland is EUR 30 million (US$ 36.5 million). Certain liabilities will be deducted from this amount.
The purchase agreement also provides an earn out mechanism based on the results of the acquired business in 2005 and 2006, which allows for an increase or decrease of the purchase price of up to an aggregate of EUR 3.5 million.
"Completing this acquisition is another significant milestone and brings Frutarom closer to its target:
to achieve a sales turnover of US$ 300 million and become one of the ten largest, leading multinationals in the flavor and fragrance industry," said Ori Yehudai, President and Chief Executive Officer of the Frutarom Group. Yehudai added, "We are very satisfied at having completed the acquisition of IFF's Swiss and German fruit preparations businesses. This acquisition continues to fulfill Frutarom's strategy in recent years to grow rapidly through both fast organic growth of core activities and strategic acquisitions. The activity being acquired is expected to contribute significantly to the Frutarom Group's sales turnover, as well to its profit. Frutarom intends to use this acquisition to leverage and strengthen its position as a leading global supplier to the food industry, offering natural, comprehensive solutions to leading food manufacturers, including a wide and innovative range of products for the functional food industry. The acquisition is also expected to strengthen Frutarom's activity in the field of savory flavors."
This acquisition, coupled with the acquisition of Emil Flachsmann AG (the Swiss company) last year, will expand the Frutarom Group's existing customer base and add, many customers who are among the leading multinational food manufacturers in their field, mainly in the Western European market. The fruit preparations acquisition includes activity in countries where Frutarom has been less active, such as Spain, Italy and Norway, as well as North Africa. Frutarom plans to expand the West European activity in the fruit preparations field to other areas such as North America, East Europe and East Asia.
Frutarom's human resources are expected to benefit from the addition of about 190 experienced and efficient personnel at all levels. The experienced management of the fruit preparations activity will be integrated with Frutarom's global management, and the activity's experienced research and development, and sales and marketing personnel will join Frutarom's global infrastructure.
Yehudai added that, "We believe there are strong synergies between the new fruit preparations activities and the existing activity of the Frutarom Group's two divisions (the Flavors Division and the Fine Ingredients Division) which will support extracting the most value from the integration of the two businesses.
IFF's consultation process with the French works council regarding the potential purchase by Frutarom of the French business began when the letter of intent was signed in May of this year. If this portion of the transaction proceeds, Frutarom would envisage transferring the French fruit preparations manufacturing activity to the plants acquired in Germany and Switzerland in order to reduce costs markedly while realizing the considerable inherent synergy between the activity of the three sites, and the synergy that exists between the acquired activity and Frutarom's current activity. The research, development, sales and marketing activity that serves the French market would remain in France, where Frutarom intends to considerably expand its activity.
Last week, Frutarom announced record results for both the second quarter and first half of 2004. Frutarom's sales for the first half of the year were US$ 88.5 million, growing 46.3% compared with the first half of 2003. Operating profit rose 66.0% to reach US$ 12.3 million, and net profit rose sharply by 90.6% to reach US$ 9.3 million. Net margin also rose to reach 10.5%.
Background on the Company
Frutarom is a multinational company with significant production and development centers on three continents, which markets its product in 85 countries worldwide. Frutarom's products are intended for the food, beverage, flavor, fragrance, pharmaceutical, nutraceutical, functional food, food additive and cosmetic industries.
Frutarom operates through two Divisions:
- The Flavors Division, which develops, produces and markets
flavors, and seasoning compounds.
- The Fine Ingredients Division, which develops, produces and
markets raw materials intended for the production of these same
flavors and fragrances, as well as plant extracts and natural
products, including medicinal extracts.
Frutarom is also active in several innovative activities, including through its ArtChem activity, which develops, produces and markets raw materials in the peptide field that are intended for the pharmaceutical industry producing through biotechnological methods
Frutarom's products are produced at its plants in the United States, the United Kingdom, Switzerland, Israel, Denmark, China and Turkey. The Company's international marketing organization includes branches in Israel, the United States, the United Kingdom, Switzerland, Germany, Denmark, France, Hungary, Romania, Russia, Ukraine, Kazakhstan, Belarus, Turkey, Brazil, Mexico, China, Japan, Hong Kong and India. Frutarom also works through local agents and distributors worldwide. Frutarom employs about 800 people worldwide.
For further information, please visit our website: www.frutarom.com
ots Originaltext: Frutarom Industries Ltd.
Mr Ori Yehudai
President and Chief Executive Officer
Phone +972/4/846'24'01 or 02