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“We are pleased to complete this important strategic acquisition," said Doug Tough, IFF's CEO. "We expect Aromor, with its strong R&D capabilities, to provide us with cost-effective, quality materials to use in our formula creations and external sales."
The official announcement follows earlier Israeli news reports that said a $88 million deal was in the works, although the exact terms of the transaction haven't yet been fully disclosed.
According to IFF, Aromor operations would have represented approximately $35 million of incremental sales to IFF’s results in 2013 on a proforma basis. IFF funded the transaction from existing resources. Aromor will become part of the IFF fragrances ingredients business and is expected to be accretive to IFF’s earnings per share in 2014.
“A key component of our overall ingredients strategy is to provide cost-advantaged, specialty molecules that enhance our development of consumer preferred fragrance compounds,” said Nicolas Mirzayantz, IFF's group president fragrances.
Mirzayantz continued, “We believe the use of the Aromor ingredients portfolio and their technology development process will be value enhancing by improving the overall profitability and win rate of our fragrance creations. We plan to continue to support the Aromor facility in Israel and invest in and develop their R&D and manufacturing capabilities in order to strengthen the development and production of specialty ingredients.”
Aromor, established in 1982, produces natural, natural identical and synthetic raw materials for the flavor and fragrances industries. IFF has been Aromor’s biggest client, accounting for 17% of revenues, a Haaretz Newspaper report in Israel said.
Aromor is owned by Kibbutz Givat Oz (50%) and a group of former executives of agrochemicals producer Makhteshim Agan (50%), according to reports. As part of the acquisition deal, IFF will lease the land under the Aromor factory, on Kibbutz Givat Oz, for 10 years with an option to extend the lease by an additional 10 years, the Haaretz report said.
Aromor has 80 employees, 20 of whom are members of Kibbutz Givat Oz, a Globes report noted.
It also has a sales unit based in Englewood Cliffs, New Jersey.