Frutarom buys Chr. Hansen savoury unit in Germany

By Lindsey Partos

- Last updated on GMT

Related tags: Frutarom, Financial crisis

Acquisition-hungry firm Frutarom continued its rapid growth strategy, today announcing an "extremely synergetic" €5.2m deal to buy Chr. Hansen's savoury functional systems activities in Germany.

The Israeli firm said the acquired activity, that makes and markets flavours, seasoning compounds and functional ingredients, holds a "significant market share"​ within leading industrial meat customers in Germany, and will strengthen Frutarom's positioning among these customers.

The company's president and CEO, Ori Yehudai called the deal "especially synergetic", ​adding that the new acquisition will be integrated into Frutarom's German activities, Gewurzmuller and Nesse, acquired in 2007 and 2006.

This latest deal marks the third acquisition for Frutarom in 2009, a momentum in buy-and-build that could continue as the year unfolds and opportunities arise from the economic crisis: "Frutarom is continuously seeking additional strategic acquisitions of companies and activities in its field,"​ said Yehudai.

Despite today's financial landscape that sees food firms, particularly small and medium-sized businesses, impacted by tighter access to credit from banks, Frutarom's CEO maintains the firm's "solid capital structure and ability to produce cash from operating activities, together with available credit lines from leading banks in the world",​ will enable it to harness opportunities.

While billion-euro deals in the food sector have disappeared from the headlines in recent months as the credit crunch impacts the landscape, today's difficult climate is throwing up acquisition opportunities for trade players with strong balance sheets, such as Frutarom.

Indeed, in such a challenging market, the potential purchasers could expect a good deal based on "better prices and less competition", ​Peter Seary, a corporate partner at Shoosmiths solicitors, specialising in M&A in the food sector, recently told FoodNavigator.com.

Firms unable to weather the storm will reach the market, and trade players, "in particular those which are long-standing and that have not borrowed too much"​ will see the market in their favour.

Holdorf plant to close

The Savory activity at Chr. Hansen in Germany produced sales - for the financial year ending on August 31, 2008 - of about €5.6m. In the last nine months, sales of the acquired business 'demonstrated growth'​, reaching about Euro 5m, said Frutarom

The acquired business has a production site in Holdorf, Germany, just 140km from Frutarom's production site in Nesse. In the following months, and to achieve "significant operational savings"​ Frutarom said it intends to close the Holdorf site and transfer production to its sites in North and South Germany.

Related topics: Suppliers

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