The fourth acquisition this year makes Israeli Frutarom one of world’s 10 largest companies in the field of flavors and specialty fine ingredients.
Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT; OTCBB:FRUTF), has acquired 60% of the share capital of the Indian flavors and fragrances company Sonarome Private Ltd.
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Frutarom will pay $ 17.2 million in cash, reflecting a company value of $28.6 million. The purchase agreement includes an option for Frutarom to acquire the remaining balance of shares in 2017, at a price conditional on the company’s business performance. The transaction is being financed using bank debt.
Sonarome, which was founded in 1981, develops, produces and markets flavors and fragrances. Sonarome’s revenue has grown quickly in recent years at double-digit annual rates, and reached $12 million in 2014.
Sonarome’s manufacturing, marketing, and R&D are based in Bangalore, India where it has additional production capacity. In addition to its activities in India, Sonarome has extensive activity in about 20 African markets, particularly in Nigeria, South Africa, Ethiopia, Kenya and Mozambique, which also constitute key growing target markets in Frutarom’s growth strategy. Sonarome has a broad customer base that includes global and local food and beverages manufacturers.
The founders of Sonarome, the Gulhati family, will continue in their roles with the company as management and shareholders.
Frutarom president and CEO Ori Yehudai said, “The acquisition of Sonarome is the continuation of the Frutarom Group’s implementation of its rapid growth strategy and realization of its vision ‘to be the preferred partner for tasty and healthy success.’ Frutarom has set itself the goal of expanding its activity in the emerging high-growth markets of India and Africa, both through internal growth and by means of acquisitions.
“The acquisition of Sonarome, one of India’s leading domestic companies in the field of flavors and fragrances, is another key step towards attaining this goal. Combined with Sonarome’s activity, Frutarom will continue to develop and deepen its presence in the important markets of India and Africa, capitalize on Sonarome’s R&D and sales and marketing platform and integrate it with Frutarom’s global R&D and sales and marketing infrastructure in order to leverage and realize the many cross-selling opportunities arising from this acquisition. We will also work towards leveraging Sonarome’s production and supply chain capabilities to accelerate our growth in India”.
Mr. Yehudai summarized in saying: “Thanks to Frutarom’s proven experience in executing acquisitions and realizing the synergetic opportunities inherent in combining the acquired activities with its own, we are certain that this acquisition too will contribute to Frutarom’s continued rapid and profitable growth and generate top value for our customers, employees and investors. Sonarome is our fourth acquisition this year as we continue to search out and perform further strategic acquisitions of companies and operations in our fields of activity, with special focus on activities and markets exhibiting high rates of growth.”