International Flavors & Fragrances to buy Israeli firm Frutarom for $7.1bn

International Flavors & Fragrances Inc. (IFF) has agreed to buy Frutarom, an Israeli flavours and ingredients maker, for $7.1bn in cash and stock. 

The American firm said that the tie-up will help it become a global leader in the natural taste, scent and nutrition market, as 75% of Frutarom’s sales are natural.

The acquisition will also help IFF as it expands its portfolio into fast-growing categories such as natural colours, enzymes, antioxidants, and health ingredients, and it will broaden the company's consumer base 

“Frutarom has an extremely attractive product portfolio, including broad expertise in naturals and diverse adjacencies with capabilities beyond our core taste and scent businesses,” said Andreas Fibig, chairman and chief executive officer of IFF.

“It also has significant exposure to complementary and fast-growing small- and mid-sized customers," he added. 

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International Flavors & Fragrances said that the combined company expects to generate about $5.3bn in revenue during 2018. 

It also aims to create around $145mn of cost synergies after the third full year thanks to efficiencies in procurement, footprint utilisation and streamlined overhead expenses. 

“Frutarom has had a fascinating journey of accelerated growth, far above our industry benchmarks through our investment in unique technologies and focus on natural products in the growing world of health and taste,” said Ori Yehudai, president and CEO of Frutarom.

“Today, we are extremely excited to combine Frutarom with I.F.F. and together create global leadership in natural taste, scent and nutrition,” he added. 

“The growth potential for the combined company is substantial and our shareholders will continue to enjoy this upside.”

The buy-out of Grutarom is the latest acquisition by IFF. It bought another Israeli firm - Aromor Flavors and Fragrances - in 2015 and a year later, it acquired Henry H. Ottens Manufacturing. Later in 2016, the American firm bought David Michael & Co.