Givaudan Quest acquisition finalised
after regulatory approvals were obtained in both Europe and the US.
The company is confident that the deal, which was first announced on 22 November 2006 at a price of CHF 2.8 billion, will extend improve the group's position in all strategic segments of the fragrance and flavour industry. However, the Commission concluded that Quest and Givaudan are not the closest competitors in these markets. In addition, it ruled that the combined firm would continue to face competitive pressure from several established multinational players with significant market shares as well as many smaller competitors to which customers could switch in the event of price increases. The successful £1.2bn acquisition underlines Givaudan's ambitions in the global flavour industry. "Quest has regained momentum over the last three years thanks to the talent and commitment of its people," said Givaudan chief executive Gilles Andrier in November. "Thus, we are very excited to have this unique opportunity of creating an unrivalled industry leader, building on the strength, momentum and common values of both companies." Indeed, the acquisition is in line with Givaudan's strategy of focusing on developing markets and capturing opportunities in key segments. The company has worked hard to streamline its operations, and in 2005 successfully completed the transfer of the liquid and dry flavour production from Barneveld (Netherlands) to Dortmund (Germany) and Zurich (Switzerland). In addition, the final phase of the Savoury Development Centre in Kemptthal (Switzerland) was recently completed with the inauguration of a fully dedicated pilot plant, capable of handling a wide range of food manufacturing processes. The acquisition is designed to build on this focus, and also strengthen growth in important growth markets such as Asia Pacific, Latin America and Eastern Europe. Givaudan reported double-digit growth last month in developing markets such as China, India, Argentina and Columbia. And the acquisition should also have positive implications for Givaudan's technology portfolio. The company said that the transaction would enable the company to significantly increase its research and development investments. In 2005 Quest had sales of £560 million and a trading profit of £52 million. Quest is headquartered in Naarden, The Netherlands, and employs around 3,400 globally with major activities in the US, UK, Asia and Continental Europe. Quest is one of the a leading player in the global flavour and fragrance market with a turnover of GBP 588 million (approximately CHF 1,358 million) in 2006. It currently employs around 3,400 people. Givaudan expects to achieve annual synergies of at least CHF 150 million with full benefits to be realised after year three. The acquisition is financed by CHF 1.9 billion of debt, the issuance of a mandatory convertible bond of CHF 750 million and cash.