Israeli Company Frutarom Sold for Whopping $7b to U.S. Flavor and Fragrance Company

The chemicals and flavorings maker Frutarom is being sold to International Flavors & Fragrances in a cash and stock deal that values the veteran Israeli company’s activity at about $7.1 billion.

For each Frutarom share, the Israeli company’s shareholders will get $71.19 cash and 0.249 of a share of IFF common stock. The total value based on present market valuations comes to $106.25 per share, Frutarom stated, adding that the U.S. company will be assuming its net debt.

Both companies have been around quite awhile. Frutarom is older than the State of Israel, having been founded in 1933 by Yehuda Araten and Maurice Gerzon (Israel was established in 1948). For its part, IFF was founded 129 years ago.

IFF has more than 7,000 employees. Its 2017 sales amounted to about $4.3 billion. Frutarom’s 2017 sales amounted to over $1.5 billion. The company reportedly expects 2018 sales to pass $1.6 billion. By the year 2020, it aims to achieve sales of $2.2 billion.

Back when Frutarom began its career on the Tel Aviv Stock Exchange in 1996, it was worth $13 million. Today the company is worth $5.6 billion, an increase of over 42,600%. During that time the benchmark TA-35 index has risen 590%.

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For IFF, the acquisition is expected to be neutral to adjusted profit per share in the first full year, but following that, the company expects it to boost profit. IFF intends to cover the cash portion of the deal using existing cash, new debt and $2.2 billion in new equity.

The flavorings market is controlled by big companies. Ori Yehudai, CEO, told Haaretz that he believes the industry will continue to consolidate.