Acquisition Report Catapults Frutarom Stock
On the heels of a spree of 22 acquisitions, the company is now a target of merger offers that can create the world’s largest flavor and fragrances company
The report led to a 7% increase in Frutarom's stock price on the Tel Aviv Stock Exchange by Wednesday's market close, and a daily trading volume of NIS 169 million (around $48 million), 3.4 times the daily average in the past three months. As a result, Frutarom's market capitalization rose from NIS 19 billion to NIS 20.4 billion, around $5.8 billion.
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Switzerland-based Givaudan SA is the global flavors and fragrances market. A merger between IFF and Frutarom will surpass Givaudan, even after the latter acquired a 40.6% stake in plant-based ingredients manufacturer Naturex SA in March for $1.6 billion. IFF already has a presence in Israel in specialty ingredients manufacturer Aromor Flavors and Fragrances Ltd., which it acquired for $88 million in 2014.
The small-scale acquisition strategy enables Frutarom to make most deals without taking loans, allowing it to offer around 70,000 products to every new market it enters; of the company's 30,000 clients, 12,000 have been gained in the past five years. Mr. Yehudai is also known to streamline some of the acquired assets, such as the sale of Enzymotec's krill oil business for $26.4 million shortly after the acquisition as it was not among Frutarom's core activities.Frutarom reported revenues of $1.36 billion for 2017, up 18.7% from 2016 and 56.1% from 2015. Its stock price has risen by over 530% over the past five years, and the company netted its investors 11,000% in accrued interest since its 1997 initial public offering on the Tel Aviv Stock Exchange.