Frutarom signs agreement to buy Flavor Specialties Inc

By Jess Halliday

- Last updated on GMT

Related tags: United states

Frutarom has taken the next step in its march to strengthen its position in US flavors with a new agreement to acquire Flavors Specialities Inc (FSI) for $17.2m.

The Israeli firm, which specializes in flavors and healthy extracts, has swallowed a number of smaller firms with synergistic activities in recent years, in the US, Europe, and in Israel. In 2007 it made no less than seven acquisitions. While 2008 was a year of consolidation, it announced the acquisition of UK flavor group Oxford for $12m less than a week into 2009.

The latest buy is part of a plan to strengthen Frutarom’s flavor presence in the Americas. FSI, which was founded in 1979, has a production facility in California and 38 employees. It also has activities in Central and South America.

The three founders of the firm, as well as staff and management at other levels, will become part of Frutarom USA.

Ori Yehudai, CEO of Frutarom, said he expects the acquisition to bring cross-selling opportunities, as well as to strengthen R&D capabilities in flavors, functional foods, and health related food and beverage products.

Opportunities from economic woes

Frutarom already has a position in the global top ten of flavor firms. It expects a number of acquisition possibilities thrown up by the economic situation – and given its strong capital structure and access to bank loans, it believes itself to be in a position to have its pick.

Frutarom has said that it is financing the acquisition of FSI through bank loans.

For Q3, the more recently reported quarter, Frutarom’s sales grew by 36.9 per cent to US$120m (€93m) and operating profit was reported at $15m (€11.6m), up 79.6 per cent on the prior year period. The company has also enjoyed an improvement in margins to 37.7 per cent, compared to 36 per cent for Q3 2007.

It has expressed aim to goal of being a $1bn firm by 2012.

FSI saw sales of $11.5m in 2008, and $11.2m in 2007.

Related topics: Suppliers, Flavors and colors

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