Frutarom Industries , one of the world's 10 largest companies in the field of flavours and natural specialty fine ingredients, continues its momentum of acquisitions and the implementation of its rapid and profitable growth strategy.
The company has announced the signing of an agreement for the purchase of 75% of the shares of the Piasa Group, Mexico’s top local provider of savory solutions, in exchange for overall consideration, including debt, of approximately $20.5 million. In the framework of the transaction, Frutarom will also acquire the real estate housing Piasa’s main production site, located in Monterrey, Mexico, which also serves as its headquarters.
The purchase agreement includes a mechanism for future consideration based on Piasa’s future business performance, along with an option for the purchase of the balance of shares beginning 5 years after completion of the transaction at a price contingent on the company’s future business performance. The transaction is expected to be completed within the next several weeks and will be financed through bank debt.
Frutarom sees strategic importance in significantly penetrating the Mexican market and expanding its activity in the country while leveraging Piasa’s leading market position and excess production capacity with the help of Frutarom’s global resources.
The acquisition of Piasa in Frutarom’s first acquisition in the Mexican market and its fifth in the Latin American market in the last 4 years. In 2012, Frutarom acquired the Brazilian company Mylner, which specialises in sweet flavours for beverages and baked goods, as well as in natural flavours and herbal extracts. In 2013, Frutarom acquired Aroma in Guatemala, which specialises in producing sweet flavours for beverages, dairy products, confectionery and snacks; in 2014, it acquired the natural flavours and colours division of Montana of Peru, which produces natural flavors and colors for the food industry and has significant activity in Peru and in Chile, and in October 2016 Frutarom acquired the Brazilian company Nardi, which specializes in the production of natural flavors and herbal extracts for the Brazilian beverages industry.
Also, in recent years Frutarom has taken steps to expand its activity in Latin America on the basis of its local and global production infrastructure and R&D and marketing capabilities and by exploiting the synergies arising from its acquisitions.
Piasa’s activity is largely synergetic with Frutarom's global savoury activity, and will enable Frutarom to continue expanding and deepening its activity and market share in Latin America and reinforce its supply of products in the savoury field and other areas, while leveraging Piasa’s specialised know-how and technology along with its expansive marketing platform which will provide entry into new areas of activity in Mexico while capitalising on cross-selling opportunities.
Mr Ricardo Madrigal, the CEO of Piasa Group and one of its founders, will continue serving in his role and will join Frutarom’s global flavours activity management along with remaining a shareholder in Piasa.
Ori Yehudai, President and CEO of Frutarom Group, said: "The acquisition of Piasa is the continuation of the implementation of Frutarom Group's rapid profitable growth strategy and the realisation of its vision to be the preferred partner for tasty and healthy success. This is an important strategic acquisition that provides Frutarom significant entry into the Mexican market, one of Latin America’s main markets and among the most important and fastest growing in the world."
"Piasa is a leader in Mexico’s savoury solutions market and we intend to continue expanding its activity with the support of Frutarom’s global infrastructures and based on Piasa’s quality production infrastructure with its excess capacity as well as through exploiting cross-selling opportunities by offering Frutarom’s broad portfolio of solutions to Piasa’s Mexican customers and gaining new customers in the local market, along with expanding Piasa’s activity to those countries in the region where Frutarom already has a sales and marketing infrastructure in place."
“We will continue working to expand our activity in Latin America and other growing emerging markets where our growth engines are focused," said Mr Yehudai.