Israeli flavor firm Frutarom has agreed to acquire Cincinnati, Ohio-based Flavor Systems International for up to $45.3m, the company has said.
Frutarom said that it will pay $35.3m for the company in a few weeks, but the final price is dependent on future earnings and could therefore range from $29.3m to $45.3. It will also pay $6.5m for real estate assets.
The acquisition will allow it to enter market segments where Frutarom currently is not active, such as the US savory flavors market and flavored coffee and shakes, the company said. It also includes a new production site, in the final stages of construction, which is due to be completed in the next few weeks.
President and CEO of Frutarom Ori Yehudai said: "Flavor Systems… considerably expands our activities in USA, which is the world's largest flavor market, and supports Frutarom's future strengthening and positioning in the global market.
“…The entry to the flavored coffee market and penetration to leading convenient stores and food chain stores in the USA is an important step for Frutarom.”
He said that the acquisition will allow the company expand its business in the United States and enter the US savory market for the first time. The company already has a strong presence in the savory market in Europe.
The transaction is the latest in a raft of acquisitions for the company, and is its fifth in the current year.
Yehudai said: "We have an excellent acquisitions pipeline in both developed markets and developing countries, with special attention to Asia, Central and South America and Eastern Europe. Our strong capital structure, combined with credit lines from leading banks in the world will enable us to seek additional strategic acquisitions, aiming to multiply Frutarom's sales turnover again within the next four years."
The company said that it will merge Flavor Systems International with its existing flavor operations on the East and West Coasts.