Frutarom to buy Israeli flavour firm Raychan

By Jess Halliday

- Last updated on GMT

Related tags: Remainder

Frutarom has signed an agreement to acquire fellow Israeli firm
Raychan Food Industries - its third buy in flavours arena this year
and one that will allow it to expand its offering to existing
clients on a worldwide basis.

The acquisition of 100 per cent of Raychan's share capital is for a consideration of US$1.05m, plus assumption of debt (minus working capital) of $1.23m. It is subject to final approval of the Israeli anti-trust commissioner. Conditional approval was given yesterday, subject to certain conditions to remove competitive fears, and the final green light is expected within three months. Raychan's activities are largely centered on the domestic Israeli market, and are said to be synergistic with Frutarom's own operations in the country, as well as those of the Nesse company, which was acquired in early 2006. Frutarom plans to integrate Raychan into its flavours division, and has said that it expects the savoury and functional products portfolio to broaden its own offering to customers, both in Israel and worldwide. In particular, it plans to take the products into markets in which Frutarom is active but Raychan has not been, such as Eastern Europe and Turkey. In terms of R&D, Raychan brings with it technological capabilities and infrastructure that will strengthen Frutarom's, especially in the area of savoury flavour compounds. This latest acquisition is Frutarom's third this year; the other two, of UK firms Belmay and Jupiter, are also in the flavours arena. Raychan is also Frutarom's thirteenth acquisition in 15 years, and a demonstration of its on-going rapid growth strategy. Raychan's management team will be integrated into Frutarom's. In a recent interview with FoodNavigator.com, president and CEO Ori Yehudai said that rather than come in over their heads, it is the firm's usual practice to explore synergies and new strategies with the existing management and to draw up a detailed plan that is implemented from the very first day. In 2006, Frutarom reported sales of $287m, to which the flavours division contributed 65.1 per cent. The remainder was generated by the fine ingredients division. It now said to hold the number seven spot in flavours worldwide. Raychan's sales for 2006 were around $5.5m.

Related topics: Flavors and colors

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