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Frutarom Industries Ltd. has signed an agreement for purchase of the full share capital of the International Aroma Group, a Panamanian company, holder of the Guatemalan Aroma group.
It also completed the acquisition of 75% of the share capital of the Cypriot Vantodio Holdings Limited company, holder of the Russian Protein Technologies Ingredients group (Frutarom also has the option to purchase the remaining 25% of Vantodio shares).
The deal with International Aroma Group was agreed upon with a net cash payment of $12.5 million. The share purchase agreement contains a mechanism for payment of future consideration.
Aroma, established in 1990, deals in the development, manufacture and marketing of flavor solutions, including mainly sweet flavors for beverages, dairy products, confectionery, snack food and convenience foods. Aroma has 57 employees, a production, development and marketing site in Guatemala City and a customer base which includes international food and beverage manufacturers as well as local food and beverage manufacturers in Guatemala, Honduras, Costa Rica, El Salvador and other developing countries, mainly in Central America. Aroma's founder and manager will continue managing Aroma, together with Frutarom's management.
In the years ending Dec. 31, 2011 and Dec. 31, 2012 Aroma's sales turnover stood at $5.5 million and $6.3 million, respectively. Aroma sales over these years grew by 28.3% and 14.5%, respectively.
Aroma is growing in both the local market as well as in export, and plans to expand its business in neighboring countries. It is the Frutarom's estimate that the acquisition of Aroma will significantly expand Frutarom's activity in Latin America, and will strengthen its presence and market sector in these markets, which Frutarom has identified as attractive markets for further expansion. The company said this acquisition is a natural addition following the acquisition of the Brazilian flavor company Mylner, which Frutarom acquired at the beginning of 2012, and to Frutarom's independent operations established in Costa Rica, which includes a development lab and marketing and sales infrastructure. It is the company's intention to integrate its activities in Costa Rica with Aroma's activities, which will become a center for research, development and production for countries in Central America.
Frutarom said low production costs in this region give Aroma a significant advantage in production, and contribute to its profitability. Frutarom estimates that this acquisition will add the advantages of the presence of a local manufacturer in Latin America and will bring about significant operational savings through transfer of production to the Aroma site, as well as shortening supply times and improving customer service in the region.
It is Frutarom's intention to utilize this acquisition, and to combine Aroma's production, R&D, marketing and sales infrastructures, as well as Frutarom's global R&D, marketing and sales infrastructure, for the purpose of leverage and realization of cross-selling options. Frutarom also said it can further leverage Aroma's production capacity for its business in the area.