Frutarom buys RAD Natural Technologies for $4.1m
acquisition of the year - a move that adds to its growing weight in
the taste and health arena.
RAD, an Israeli company like its new owner, specialises in the research, development, production and sale of anti-oxidant plant extracts. The two companies have had a relationship since 2004, when they cut a deal that gave Frutarom worldwide marketing rights to a range of RAD's natural antioxidants. According to Frutarom, RAD's activities complement its own in natural health and taste, and are particularly in line with capabilities bolted on through some other recent acquisitions - Gewurzmueller in October, Raychan in August, and Nesse in 2006. Today's acquisition news related to all RAD's assets (but not its liabilities), for which Frutarom is parting with US$4.1m in cash (financed through bacnk loans). The deal also comes with an earn-out mechanism based on future sales: If RAD sales amount to more than $11m in 2008-9 it will be entitled to an additional $4.9m. This goes considerably further than the 2004 memorandum of understanding over distribution, which also gave Frutarom an option to acquire up to 50 per cent of RAD shares over three years. RAD's products, which are patent protected, will be incorporated into Frutarom's flavours division. The plan is to tap into existing synergies, and take the newly acquired portfolio into the 120 countries in which Frutarom operated. "Combines with Frutarom's other acquisitions, this establishes Frutarom's position as one of the ten leading large companies in the world in the field of flavour," said the company. In fact the antioxidant nature of the extracts mean it has a tie with the fine ingredients division too, which is concerned with natural flavour extracts, natural functional food ingredients, natural pharma- and nutraceutical extracts, specialty essential oils and citrus, and aroma chemicals. In addition to food, they are targeted at dietary supplement and cosmetics manufacturers. The company's slogan for its vision is "to be the preferred partner for tasty and healthy success". In addition to Gewurzmueller and Raychan, Frutarom's other acquisitions this year have been Abaco, Adumim Food Additives, Jupiter and Belmay. Frutarom reported sales of US$287.2m in full year 2006, up from $243.8 in 2005. Operating profits for the year increased 12.9 per cent over 2005 to US$37.1m.
