IFF of NY Acquires Israel’s Frutarom in $7B Mega Deal

Frutarom Industries has production and development centers across the world (Photo Israel 21C)

International Flavors & Fragrances of New York will acquire Frutarom of Haifa in a cash-and-stock transaction valued at approximately $7.1 billion, including the assumption of Frutarom’s net debt, the companies announced on Monday. The combined company is expected to have approximately $5.3 billion of revenue in 2018.

Following the close of the transaction in six to nine months, Frutarom President and CEO Ori Yehudai will serve as a strategic adviser to Andreas Fibig, IFF chairman and CEO. IFF will remain headquartered in New York City and will maintain a presence in Israel. IFF’s stock at closing will be listed on the New York Stock Exchange (NYSE) and the Tel Aviv Stock Exchange (TASE).

Frutarom, founded in 1934 and based in the northern coastal city of Haifa, develops and produces flavors for the food, pharmaceutical, cosmetics and perfume industries and has a focus on natural products. It went public on the Tel Aviv Stock Exchange in 1997.

The US company IFF, headquartered in New York, is third largest in its field but with the buying of Frutarom it will reportedly make it the largest flavors company in the world. According to the Times of Israel, over the past 12 months Frutarom’s profits have surged by 64 percent and it posted record sales of $1.36 billion in 2017.

Frutarom, a fast-growing flavors, savory solutions and natural ingredients company, has production and development centers on six continents, marketing 70,000 products to more than mainly 30,000 mid-size customers in more than 150 countries. Natural products drive more than 75 percent of its sales, which were expected to exceed $1.6 billion in 2018.

“Frutarom has had a fascinating journey of accelerated growth, far above our industry benchmarks through our investment in unique technologies and focus on natural products in the growing world of health and taste,” CEO and President Ori Yehuda said in a statement, adding that the companies “are committed to maintaining a presence in Israel.”

“We are extremely excited to combine Frutarom with IFF and together create global leadership in natural taste, scent and nutrition,” he said. “The growth potential for the combined company is substantial and our shareholders will continue to enjoy this upside.”

Frutarom has a global reach with production plants and development bases in the US, UK, Ireland, Canada, China and Morocco. It sells over 70,000 products to 30,000 customers worldwide across 150 countries, according to the Times of Israel.

“Frutarom has an extremely attractive product portfolio, including broad expertise in naturals and diverse adjacencies with capabilities beyond our core taste and scent businesses,” said Fibig.

“This transaction represents a major milestone for Frutarom and opens the door to a new chapter of growth and shareholder value creation,” said John Farber, Frutarom chairman of the board and chairman of ICC Industries, Frutarom’s largest shareholder. “I am pleased to support this historic combination of two world-class companies and look forward to the next chapter of the IFF and Frutarom story.”

 

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