Flavor & Fragrance Industry, Industry News

IFF to buy Frutarom in flavor and fragrance consolidation

IFF to buy Frutarom in flavor and fragrance consolidation

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Frutarom, the acquisitive Israeli flavor and fragrance firm, will soon be itself acquired by International Flavors & Fragrances in a $7.1 billion cash and stock transaction. The deal continues a rush among big ingredient suppliers to buy natural ingredient assets.

Frutarom’s $1.6 billion in projected sales this year will bring IFF’s sales to about $5.3 billion when the deal is completed in the next six to nine months. IFF, now the fourth-largest flavor and fragrance maker, will vault ahead of Firmenich to occupy the number two spot just behind Givaudan, IFF says.

IFF CEO Andreas Fibig calls Frutarom “extremely attractive” for its “broad expertise in naturals and diverse adjacencies, with capabilities beyond our core taste and scent business.” Among those adjacencies are fast-growing categories including enzymes, antioxidants, health ingredients, and natural colors.

For Frutarom, the acquisition is a final chapter for a company that started as a maker of extracts and essential oils in 1933 and grew by acquisition to become the world’s sixth-largest flavor and fragrance maker. The firm has made 39 acquisitions in the past five years and boasts 5,600 employees, including 600 in R&D.

IFF, which employs 7,300 people, 1,600 of them in R&D, has not been so acquisitive. Since 2015, the firm has made five deals, the most recent of which were for Fragrance Resources, a fine fragrances firm, and Powder Pure, an organic flavorings firm.

Competitors are actively buying natural ingredient assets too. Earlier this year, Givaudan agreed to acquire Naturex, a maker of natural food, nutrition, and personal care ingredients, for $1.6 billion. Givaudan previously bought the natural ingredient makers Spicetec and Activ International.

In 2015, Germany’s Symrise acquired the pine-derived fragrance and food ingredient maker Pinova for $397 million. Pinova itself consisted of the former Ashland pine chemical business and the pine-based flavor and fragrance business of LyondellBasell Industries.

The boards of both IFF and Frutarom have approved the deal, as has ICC Industries, a New York City-based firm that owns a 36% stake in Frutarom. The companies will still need to secure regulatory approvals.

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