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Analyzing the Symrise-Manheimer-Intercontinental Deal

Reported by Jeb Gleason-Allured, Editor

It's official: Symrise has acquired Manheimer Fragrances and Intercontinental Fragrances. The moves strengthen Symrise's air care capabilities, particularly on the core lists of key candle customers. Interestingly, Kerry's natural products business is not part of the deal. The purchases are expected to impact fiscal 2009 results. There is talk about the industry of another purchase, but nothing has been confirmed as of press time.

The news comes after weeks and months of rumors and further underscores the consolidation of major industry players. The question is, with unsteady world markets, do companies have accessible capital to complete more deals in the foreseeable future? And, if so, which companies?

Meanwhile, Symrise has plans to open a global air care center in the United States. By all accounts, the company is now in the very top tier of fragrance suppliers/marketers to the $300 million US air care market. Symrise's overall share of the US fragrance market has also grown with the moves.

While Manheimer's activities are primarily US-based, Intercontinental brings with it modest footholds in Asia, Latin America and Europe. An official release notes, "Intercontinental Fragrances generated sales of $16 million," adding, "In 2007, Manheimer Fragrances had sales of $40 million."

"In addition to Asia, the US is the most important growth region for our Scent & Care division“, said North American scent and care president Klaus Stanzl, in an official statement. “Winning new industrial and retail partners will strengthen our market position in North America and accelerate our growth. The synergies of these two companies will make Symrise one of the leading North American suppliers of air care fragrances. Furthermore, having a larger portfolio of certified organic and fair-trade ingredients will help us meet our customers' growing demand worldwide for sustainable products."

According to the company:

The anticipated combined consideration for the transactions, which is partially contingent on the attainment of certain milestones, will be $100 million. In 2008, the acquisitions will add $12 million dollars to Group sales, assuming closure of the Manheimer transaction towards the end of October. After integration costs are taken into account, the Group EBITDA will not be materially impacted this year, but Group earnings will be enhanced in 2009. Integration will be completed in the first half of 2009.

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