Frutarom Acquires 75% of PTI Group For $50 Million

HAIFA, IsraelFrutarom Industries Ltd. has acquired of 75% of the share capital of the Protein Technologies Ingredients Group (PTI Group) for $50.3 million in cash. The transaction, which will be completed within days, bolsters Frutarom's position as one of the world's largest and leading flavor companies positioned as a leading global manufacturer of savory taste solutions.

The acquisition reinforces Frutarom's technological capabilities and expands both the range of savory flavors (non-sweet tastes) and functional products offered to worldwide customers and its wide global customer base. The agreement includes an option to acquire the remaining share capital within three years.

Established in 1996, the PTI Group is a developer, manufacturer and marketer of unique and innovative savory taste solutions that include flavors, seasoning compounds and functional raw materials for the food industry (including unique protein-based ingredients that are manufactured using advanced technology), with a special emphasis on the processed meat and convenience food industry.

Sales of the savory taste solutions business in 2012 were $60 million with operating profit margins similar to those of Frutarom's Flavor activity, with which it will be merged. PTI also has a trade and marketing segment that sells raw materials that are not manufactured by the company. The business, which will be merged with Frutarom's Trade and Marketing activity (not its core business) amounted to $50 million in 2012 and has similar profit margins as Frutarom's Trade and Marketing activity.

The PTI Group operates two production sites near Moscow and a new sales and marketing R&D center in Moscow that includes development and application labs and 25 distribution centers across Russia and neighboring countries. Following the acquisition, Frutarom will become one of the few global players with substantial production sites in Russia and with an R&D, sales, marketing and distribution network that is one of the largest and leading in Russia and neighboring countries. The company's founders will remain in their respective positions in the company and as shareholders.

Commenting on the deal, Ori Yehudai, president of Frutarom, said: The acquisition of PTI continues the implementation of the rapid growth strategy of the Frutarom Group and its vision "to be the preferred partner for tasty and healthy success. Frutarom considers the savory taste solutions business an important and strategic growth engine and invests in the development of unique products, with high added value, across its global sites. The acquisition of PTI, following prior acquisitions, is another step in the establishment of Frutarom's leadership in this important area, and we plan to continue investing in the expansion of our savory business in other countries, including through acquisitions."