Frutarom Industries Ltd. has acquired 100% of UK-based flavor company Aromco Ltd. for $25 million in a cash transaction, and in doing so, has made its fourth acquisition of a flavor company since the start of 2011.
Aromco develops, manufactures and markets flavors for the beverage, dairy, confectionary, bakery and savory markets. Founded in 1985 by owner Keith Brown to focus on business penetration and development in the growing markets of Eastern Europe, Africa and Asia, as well as build market share in the UK, the company achieved sales turnover of $13 million in 2010. Acquiring Aromco will enable Frutarom to broaden its activity and market share in these developing markets and strengthen its current product supply chain. Additionally, Frutarom plans to utilize Aromco’s innovation activities in flavor creation, development and application using Aromco’s existing operational activity in England, which employs 40 people, to compliment the merged activities using Frutarom’s global organization and its operational and cross-selling synergies.
Of the transaction, Ori Yehudai, Frutarom’s president and CEO, said, "The acquisition of Aromco, which is active and growing extensively in developing markets, complements our strategy and strengthens our presence and market share. Aromco's activity in the UK market will be merged with Frutarom's existing successful activity in which Frutarom is already considered a leading player. We will strive to maximize the numerous synergies among the different activities of Frutarom by utilizing the operating synergies in the different countries to accelerate the cross-selling opportunities and to achieve significant efficiencies and savings. The acquisition enriches Frutarom with a skilled and experienced research and development team which will contribute to expanding our existing product and technology range enabling an enhanced offering to our customers.”
Yehudai added that "Aromco's acquisition was the fourth completed since the beginning of 2011 and it continues the realization of our strategy to integrate internal profitable growth with strategic acquisitions to double the sales turnovers within the next four years. We are convinced that the current acquisition will contribute to Frutarom's rapid growth and profitability and will produce high value to our customers, employees and investors.”
He concluded by saying, "Frutarom will act to locate and to carry out additional strategic acquisitions of companies and activities in its chosen markets. We strive to continue the realization of the excellent pipeline of acquisitions in developed markets in the United States and Western Europe and developing countries focused in Asia, Central and South America and Eastern Europe. Our stable capital structure combined with world leading banks credit lines will enable us to continue carrying out additional strategic acquisitions.”