Deals
Frutarom Industries Ltd Acquires Flavors Company in the U.S.A.
Frutarom Industries Ltd. ("Frutarom" or the "Company") hereby announces that yesterday it signed an agreement for the acquisition of 100% of the share capital of the US based Hagelin & Company Inc. and all holdings in the US based BRC Operating Company LLC (jointly: "Hagelin"), in return for a cash payment of US$52.4 million. The acquisition will be performed through a Frutarom subsidiary in the United States. Consideration was determined based on Hagelin's operating margin and EBITDA, its substantial activity and growth in the area of beverage flavors, its assets, including equipment, customers, know-how, technology and Hagelin's long standing goodwill.
The acquisition was completed upon signing and financed through short-term bank financing, with interest at LIBOR + 1.1%. No changes have been made in the financial covenants undertaken by the Company.
Hagelin, founded in 1967 and currently employing 84 workers, develops, produces and markets flavors and unique flavor technologies for the food industry, with an emphasis on the growing area of beverage flavors. Hagelin's sales turnover reached US$24.2 million in 2012, a 7% growth compared with its sales in 2011. Hagelin has higher margin rates than those of Frutarom's Flavors' division (the most profitable of Frutarom's activities) into which Hagelin's activity will be integrated.
Hagelin has distinct competitive advantages, and specializes, among other things, in the development of advanced flavor technologies in the areas of sodium reduction, sugar and calorie reduction and flavor enhancement. This acquisition expands the product portfolio and innovative and advanced technologies Frutarom offers its customers throughout the world in the area of soft drinks, functional beverages (containing healthy ingredients) and alcoholic beverages, as well as in the area of savory flavors.
Hagelin's experienced management will be integrated into Frutarom USA's management, and will contribute from its rich experience.
Hagelin's customer base includes leading international food and beverage manufacturers as well as local food and beverage manufacturers in the US, the UK and in developing markets, mainly in Central and South America and in Africa, markets with high growth rates. The acquisition is expected to expand Frutarom's customer base, while creating many cross-selling opportunities.
Hagelin has three R&D, production and marketing sites, two in the United States (in New Jersey and in Georgia), and one in the UK. Hagelin's activities are to a large extent synergetic with Frutarom's activity in the US, which has grown considerably over the last few years (43% in 2012), combining high, profitable organic growth with acquisitions. Frutarom has three production sites in the United States, and will act to combine and optimally utilize management, R&D, marketing and sales, and procurement infrastructures and the supply chain between its operations and Hagelin's in the US. Frutarom intends to integrate Hagelin's activities in the UK with Frutarom's growing activity in the UK, and to integrate Hagelin's activity in Central and South America and in Africa with Frutarom's local activities in these regions. It is the Company's estimate that integration of activities will contribute to the achievement of maximal commercial and operational efficiency, a reduction in Frutarom's costs and an improvement in its competitive capacity and in the services it offers its customers.
To the best of the Company's knowledge, Hagelin is not a related body to Frutarom and there are no restrictions by law or legal arrangements relating to the owners of the asset restricting the use thereof. No tax or any other fees apply with respect to the acquisition.
To the best of the Company's knowledge, none of Frutarom's interested parties have any personal interest in the acquisition.
In the years ending December 31, 2011 and December 31, 2012 Hagelin's sales turnover stood at US$22.7 and 24.2 million, respectively.
The financial data presented above is based on Hagelin's reviewed financial statements, compiled in accordance with US GAAP standards.
This report includes forward-looking statements, as defined by the Israeli Securities
Law - 1968. These forward-looking statements include, inter alia, data, forecasts, goals, assessments, evaluations, and/or other information relating to future events or circumstances which may or may not be realized and which are not solely in Frutarom's control.
These forward-looking statements are based on estimates determined by Frutarom's management based, inter alia, on the information available to the management at the time of publication, including estimates relating to the activities of Frutarom, objectives, goals, strategies, events and future intentions.
By their nature, forward-looking statements involve risk and uncertainty and are not guarantees of future performance. The realization or lack thereof of forward-looking statements will be determined, among other things, by risk factors that characterize Frutarom's activities, changes in the environment and external factors that impact the Frutarom Group (including Hagelin) and its areas of activities.
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