FDBusiness.com

Frutarom Industries, one of the world’s largest companies in the field of flavours and fine ingredients, is continuing to implement its rapid growth strategy with the acquisition of 75% of Moscow-based Protein Technologies Ingredients Group, for a cash consideration of US$50.3 million (reflecting a company value of $67 million). PTI has net assets valued at above $40 million and no debt. The agreement includes an option to acquire the remaining share capital within three years.

PTI Group, which was established in 1996, is engaged in the development, manufacture and marketing of unique and innovative savory taste solutions (the non-sweet spectrum) that include flavours, seasoning compounds and functional raw materials for the food industry (including unique protein-based ingredients, which are manufactured using advanced technology), with a special emphasis on the processed meat and convenience food industry. Sales turnover of the savory taste solutions business, which constitutes PTI’s core business, have been growing rapidly over the past few years, at a double-digit rate annually, and in 2012 amounted to $60 million with operating profit margins similar to those of Frutarom’s Flavor activity, with which it will be merged.

In addition, PTI has a trade and marketing segment which sells raw materials that are not manufactured by the company, as part of a comprehensive service to its customers. This business, which will be merged with Frutarom’s Trade and Marketing activity (not its core business) amounted to $50 million in 2012 and has similar profit margins as Frutarom’s Trade and Marketing activity.

PTI has shown impressive growth rates in the last few years and its sales turnover grew 8% in 2011 and 5.2% in 2012, with sales of $111 million, and an EBITDA of $10.5 million. PTI’s savory flavour business, which is its core business, grew at a higher pace and by a double-digit rate over these years. PTI’s overall business grew 13% between 2010 and 2012.

The PTI Group operates two production sites not far from Moscow and a new sales and marketing R&D center in Moscow that includes development and application labs and 25 distribution centers across Russia and neighboring countries. The company employs a staff of 500, of which more than 40 deal with R&D, including 17 PhDs in the fields of food engineering, biotechnology and chemistry and around 200 that deal with sales, marketing and distribution. Following the acquisition, Frutarom will become one of the few global players with substantial production sites in Russia and with an R&D, sales, marketing and distribution network that is one of the largest and leading in Russia and neighboring countries.

PTI’s activity is largely synergetic to Frutarom’s global savory business, which grew substantially over the last few years due to the acquisition of the savory business of Nesse, Gewurzmuller and the savory business of Christian Hansen, which were acquired by Frutarom in 2006, 2007 and 2009, respectively, the acquisitions of EAFI, the savory business of Rieber and FSI in 2011, the acquisition of Savoury Flavours and Etol in 2012 and the acquisition of Jannderee in 2012. The acquisition of PTI will enable Frutarom to expand the range of savory products and broaden its activity and market share in developing and developed countries.

Ori Yehudai, president of Frutarom, comments: “The acquisition of PTI continues the implementation of the rapid growth strategy of the Frutarom Group, and its vision ‘to be the preferred partner for tasty and healthy success’. This a major strategic acquisition, which bolsters Frutarom’s position as one of the world’s largest and leading flavor companies, which is positioned as a leading global manufacturer of savory taste solutions. This acquisition reinforces Frutarom’s technological capabilities and expands both the range of savory flavors (non-sweet tastes) and functional products offered to worldwide customers and its wide global customer base.”