Frutarom said it will pay €5.9m ($7m) for the group, which generated sales for the 12 months to end-June of €2.9m ($3.4m).
Mühlehof, which was founded in 1979, engages in the development, production and marketing of “savoury taste solutions”, including flavours, seasoning blends, marinades and functional ingredients for the food industry. The group is particularly focused on convenience foods and meats and manufactures products that are “tailor-made” for its customers and Swiss tastes, Frutarom said.
Strength in Swiss savoury
Frutarom said the deal is complementary to its European activities and will strengthen its presence in the Swiss savoury flavour market.
“Mühlehof’s activity is synergetic with Frutarom’s activity in Europe in the field of savoury, which has grown significantly in recent years, particularly with its activity in Switzerland,” the company stated.
Frutarom’s existing Swiss business includes savoury flavour extracts and natural speciality ingredients as well as products containing fruit, vegetable and other natural components.
Mühlehof benefits from a “broad customer base”, including Swiss retail chains. Frutarom said it foresees a “large number and variety” of cross-selling opportunities.
“The acquisition of Mühlehof will strengthen Frutarom’s market leadership in Switzerland, allowing it to continue expanding and deepening its activity and market share in the country and to generate and exploit synergies in the areas of R&D, sales, operations, purchasing and logistics and attaining significant savings from the merger,” the company concluded.
Strategic focus on savoury
Frutarom indicated it sees “great strategic importance” to deliver rapid growth in savoury flavours, where it is concentrating efforts on natural and healthy products that deliver added value to its customers.
The company noted the global market for savoury flavours is growing due. This is being propelled by rising living standards and shifting consumer habits, which are resulting in increased demand for prepared convenience foods.
Frutarom has used M&A to build out its presence in the savoury sector. Recent acquisitions include AMCO of Poland, Wiberg of Austria, Redbrook of Ireland and Piasa of Mexico in 2016. This year alone, Frutarom has acquired six businesses: Unique Flavors in South Africa, the French flavours company René Laurent, the Vietnamese flavours company WFF, SDFLC in Brazil and Flavours and Essences in the UK. This latest deal was announced just last week.
"This is another acquisition of activity in Frutarom’s core field which strengthens our market leadership in the field of savoury overall and in Switzerland in particular, and enables us to offer our customers and Mühlehof customers a broader portfolio of solutions based on the innovation and technologies of Frutarom products in the savoury segment, and to even further improve our service with our now having a production base in Switzerland in the field of savoury solutions,” Ori Yehudai, president and CEO of Frutarom, said.
“We will work towards achieving the maximum possible commercial and operational efficiency from merging Mühlehof’s activity with our activity in Switzerland, Germany, Austria and Italy.”
Acquisitive Frutarom is also on the lookout for further M&A targets as it looks to consolidate the flavours market. “We have an outstanding pipeline of further strategic acquisitions of companies and activities within the scope of our operations and we will continue carrying out our rapid profitable growth strategy, which is based on combining profitable internal growth and strategic acquisitions,” Yehudai said.
The company is targeting sales of at least €1.7bn ($2bn) and an EBITDA margin of “over 22%” by 2020.