Frutarom has signed an agreement for the purchase of 51% of the shares of the Israeli company Turpaz for approx. $15.1 million, with an option for the purchase of the balance.
Frutarom has signed an agreement for the purchase of 51% of the shares of the Israeli company Turpaz for approx. $15.1 million. The agreement includes an option for the purchase of the remaining balance of Turpaz shares starting about four years from the date of completion of the transaction at a price based on Turpaz’s business performance during the two years leading up to the date of notification on exercising the option.Turpaz began its activities in 1970 and engages mainly in the development, production and marketing of fragrance solutions. Turpaz, with 16 employees, has an R&D, manufacturing and marketing site in Israel and recently opened a centre for R&D, production, sales and marketing in the US state of New Jersey. Turpaz is said to have a diverse portfolio of products and solutions which are based on considerable know-how and experience, and a broad customer base, and to have exhibited impressive growth rates in recent years while improving its profitability margin. Frutarom decided to launch a strategic move to develop its global activity in fragrances, with emphasis on emerging markets with high growth rates. The Turpaz acquisition joins Frutarom’s small existing fragrances businesses situated mainly in India, in Africa and in Latin America. According to Frutarom, the global fragrances market was estimated in 2016 at $13.2 billion (a larger scope than flavours which is estimated at $11 billion) with projections for sales in the flavours and fragrances markets to grow at an annual rate of 3% between 2015 and 2020. According to these projections, the rate of growth in emerging markets like Asia, Central and South America, Eastern Europe and Africa is expected to be higher as a result of changing consumer preferences in these markets and rising standards of living and disposable income, and could reach an average annual rate of 5.1% over the years 2015 to 2020. Fragrance extracts are sold to customers in the perfume, cosmetics, personal care, household cleaning agents, detergents, air freshener and scented candle industries and more. Like flavours, Frutarom notes, fragrances are tailor-made developed blends according to customer specifications, involving the building of long-term relationships between the manufacturers and customers and high importance given to innovation, supplier reliability, service quality and the manufacturer’s familiarity with their customers’ needs for whom the unique fragrances have been developed. "The acquisition of Turpaz is an important step towards the implementation of Frutarom’s strategy to develop a global business in fragrances,” said Ori Yehudai, President and CEO of Frutarom. “The field of fragrances is synergistic and complementary to the field of flavours in terms of, among other things, raw materials and production processes, and many players in Frutarom’s fields of activity engage in both flavours and fragrance activities together. Frutarom’s strong management is now solid enough and well enough established to develop this additional area of activity. “We see interesting and diverse growth opportunities for fragrances, especially in emerging markets, and the potential to perform acquisitions of companies with combined flavour and fragrance activities, including in countries where Frutarom is already active, with the potential to realize interesting operational synergies.”