Frutarom completes acquisition of UK flavour group
Frutarom has finalized its acquisition of the UK flavour and fragrance company Oxford, which brings it one step closer to its goal of being a $1bn group by 2012.
The deal, first announced last month, comes a year after a string of acquisitions helped drive the Israeli firm in its aggressive growth strategy.
Frutarom forked out $12m (€9.3m) for Oxford, which it expects will help boost its customer base through its portfolio of specialist flavour and fragrance ingredients.
Oxford has a production and development plant in the north of England, not far from Frutarom’s existing base. Oxford’s sales in 2007 were around US14m (€10.5m), operating profit came in at $0.9m (€0.7m).
Frutarom, which is financing the acquisition through a long-term bank loan, estimates that operating profit from Oxford in 2008 will increase more than 50 per cent to over $1.5m (€1.1m). The Israeli firm said it would act to achieve operational savings from the integration of activities, thereby pushing margins above Frutarom’s average margins.
The plan is to leverage synergies and cross-selling opportunities: Oxford’s portfolio of ingredients will be sold to Frutarom’s customer base and vice versa. In particular, this will bring new offerings on board for customers in the markets that Oxford has not covered in the past.
Oxford is said to count major multinational firms in the sector amongst its “hundreds of clients”.
“Frutarom will act immediately to integrate Oxford's activity with that of Frutarom's Fine Ingredients Division while realizing and utilizing the extensive commercial and operational synergy that exists between Frutarom's operations and Oxford's operations in order to take maximum advantage of the cross-selling opportunities and achieving maximum cost savings," said Ori Yehudai, president and CEO of the Frutarom Group.
Frutarom has been snapping up businesses and incorporating them into its flavours and fine ingredients divisions over the past few years; it has expressed aim to goal of being a $1bn firm by 2012. In 2007 it acquired no less than seven businesses, but 2008 was regarded largely as a year of consolidation.
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.