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Frutarom snaps up Gewurzmuller in expansion drive

By Neil Merrett , 15-Oct-2007

Frutarom today announced it had agreed to acquire German-based Gewurzmuller Group for $67m (€47m), a move to further expand the company's presence in the global market for flavours and functional ingredients.

The Israeli company said the pending purchase was a continuation of its rapid growth strategy over the last few years. Frutarom is increasingly looking to expand into Europe's burgeoning market for products like flavours and functional ingredients to meet the needs of the dairy, meat and baked goods industries. The company expects the addition of the Gewurzmuller group's operations and technical knowledge to help it achieve this aim. By acquiring the group's Gewurzmuller and Blessing Biotech arms, the company will significantly boost its production output in Europe. The Gewurzmuller division specialises in producing savoury flavours and seasoning compounds for processed meats and convenient foods. Blessing Biotech produces starter cultures used in fermentation of micro organisms and enzymes, mainly for the dairy and bakery industry. In acquiring these businesses, Frutarom will also claim Gewurzmuller's two production sites located in Stuttgart, Germany. The main plant, constructed just two years ago, meets the stringent standards for European food and beverage production, according to the company. Besides significantly expanding production output, Frutarom claims that the purchase will also further expand its research and development capabilities by combining Gewurzmuller's management and staff into their own operations. Gewurzmuller also has an additional sales and marketing presence in 12 countries throughout Western and Eastern Europe, including markets like Germany, Sweden, Russia and Ukraine. According to Frutarom, the savoury flavours market is expanding by between four per cent to six per cent, excluding emerging markets for its products. Group president Ori Yehudai said therefore that the purchase was an important step in the company's ongoing expansion. "This is an important strategic and significant acquisition that further establishes Frutarom's position as one of the ten largest global leaders in the field of flavours and enhances its presence and position as a leading global producer of savoury flavours," he stated. "Gewurzmuller's activity is especially synergetic and will be integrated with the successful activity of the German company Nesse, which was acquired by Frutarom at the beginning of 2006." Frutarom will claim 100 per cent of the shares in Gewurzmuller through the deal, which will be by long-term loans, the company said. Yehudai added that the purchase may not be the group's last in what has already been a significant period of expansion for the company. "The acquisition of the Gewurzmuller group is Frutarom's sixth so far this year," he stated. "Frutarom continuously seeks additional strategic acquisitions of companies and activities in its field." The Israeli firm has made several company takeovers this year alone in its home country, England, and in America as part of a rapid expansion programming, which helped drive its second quarter year-on-year sales growth. The group has already moved for UK firms Belmay and Jupiter, along with fellow Israeli group Raychan, which are also in the flavours arena. In a recent interview with sister publication FoodNavigator.com, 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. Frutarom's sales in the second quarter of its current fiscal year grew by 26.8 per cent to $91.7m (€67.9m), which the company said was driven mostly by sales in the flavours division, followed by sales in fine ingredients. Ingredients and flavours are the two parts that make up the company. In 2006, the Gewurzmuller Group posted $65m (€46m) in revenues through its operations.

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