Natural flavours and ingredients producer International Flavors and Fragrances (IFF) has agreed a deal to purchase its Israel-based flavours rival Frutarom for $7.1 billion.
IFF claims that the deal will establish the company as the largest natural flavours and ingredients company in the world, and IFF estimates that the combined business will have revenues of $5.3 billion.
A statement from IFF claimed that the acquisition will provide it with the opportunity to expand into fast-growing categories such as natural colours, enzymes, antioxidants and health ingredients, and offer its clients an enhanced product range.
The deal may have been influenced by IFF’s sector rival Givaudan’s acquisition of French ingredients firm Naturex earlier this year, which hastened the need to consolidate its position in the segment in order to keep pace with its rival.
A statement from IFF said that the combined business will aim to meet increasing consumer demands for healthy, natural ingredients by focusing on the production of solutions for the health and wellness segments.
IFF chairman and CEO Andreas Fibig said: “This transaction is a big win and a fantastic outcome for shareholders, customers and employees of both companies.
“Frutarom has an extremely attractive product portfolio, including broad expertise in naturals and diverse adjacencies with capabilities beyond our core taste and scent businesses.
“It also has significant exposure to complementary and fast-growing small- and mid-sized customers. By combining our deep R&D expertise with Frutarom’s, we are offering our customers a broader range of solutions and accelerating our growth strategy.
“We believe this combination will lead to faster and more profitable growth, enhanced free cash flow and generate greater returns for our shareholders.
“We look forward to welcoming Frutarom to the IFF family.”
Ori Yehudai, president and CEO of Frutarom added: “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.
“Today, we are extremely excited to combine Frutarom with IFF and together create global leadership in natural taste, scent and nutrition.
“The growth potential for the combined company is substantial and our shareholders will continue to enjoy this upside.”
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