Frutarom completes acquisition of PTI

Frutarom Industries Ltd. has completed the acquisition of 75% of the share capital of the Protein Technologies Ingredients Group (PTI), for a cash consideration of US$ 50.3 million (reflecting a company value of $67 million). PTI has net assets valued at above US$40 million and no debt.

The agreement includes an option to acquire the remaining share capital three years from 21 November 2013 at a price reflecting an EV/EBITDA multiple of 6 - 7x based on the average EBITDA over the three years prior to the exercise. The transaction was financed with a bank loan at LIBOR + 1.1%.

PTI, which was established in 1996, is engaged in the development, manufacture and marketing of savoury solutions (the non-sweet spectrum) that include flavours, seasoning compounds and functional raw materials for the food industry (including unique protein-based ingredients, which are manufactured using advanced technology), with a special emphasis on the processed meat and convenience food industry. PTI's sales turnover in 2012 was $111 million.

PTI's activity is largely synergetic to Frutarom's global savoury business, which grew substantially over the last few years due to the acquisition of the savoury business of Nessa, Gewurzmuller and Christian Hansen, which were acquired by Frutarom in 2006, 2007 and 2009, respectively, the acquisitions of EAFI, the savoury business in Rieber and FIS in 2011, the acquisition of Savory Flavors and Ethol in 2012 and the acquisition of Gendary in 2012. The acquisition of PTI will enable Frutarom to expand the range of savory products and broaden its activity and market share in developing and developed countries.

The PTI Group operates two production sites near Moscow and a new sales and marketing R&D centre in Moscow that includes development and application labs and 25 distribution centres across Russia and neighboring countries. The company employs a staff of 500, of which 40 deal in R&D, including 17 experts in the field of food engineering, biotechnology and chemistry, with a PhD, and a staff of 200 that deal in marketing, sales and distribution. The company's founders, with extensive experience in this area, who currently manage the company with great success, will remain in their respective positions in the company and as shareholders.

Following the acquisition, Frutarom will become one of the few global manufacturers with substantial production sites in Russia and with an R&D, sales, marketing and distribution system that is one of the largest and leading in Russia and neighboring countries.

Hence the new acquisition makes Frutarom one of the few global manufacturers with substantial production sites in Russia and with an R&D, sales, marketing and distribution system that is one of the largest and leading in Russia and neighboring countries.

In this transaction, Eagle Russia Fund together with another financial investor have fully exited their stakes into PTI, whereas the founding shareholders have sold part of their shares. The agreement includes an option to acquire the remaining share capital held by the founding shareholders within three years.Adidas Yeezy