Following eight acquisitions in 2016, the flavours and fine ingredients company will acquire a 60% majority stake in Vietnamese Western Flavors Fragrances Production (WFF) for $1.3 mn (€1.2 mn).
As part of the recently-announced deal, Frutarom will have the option to buy the remaining 40% within a four-year timeframe from when the acquisition is complete. The associated purchase price will depend on business performance in the coming years.
Vietnam’s growth potential
In highlighting the strategic significance and growth potential of Vietnam, Ori Yehudai, President and CEO, Frutarom, said: “The acquisition will contribute to strengthening our position in Vietnam with the attaining of a significant relative advantage of having local R&D, sales production presence in one of Southeast Asia’s important growing markets.”
Frutarom will also develop a new flavours plant in Ho Chi Minh City, to bolster growth already achieved through WFF’s plant, laboratory and production site in southern Vietnam in Ho Chi Minh City and its sales and marketing office in Hanoi.
The acquisition of WFF is Frutarom’s third so far in 2017 after it purchased French Rene Laurent for $23.5 mn in April as well as agreeing to buy a minority stake in Russian Pti back in February.
Frutarom has set its sights on Vietnam, Southeast Asia and the wider Asia region following the expedient growth rate of the sweet flavours market.
In 2015, the company acquired Sonarome, the Indian flavours brand, before purchasing a share of Inventive, the Chinese taste solutions company. In the same year, Frutarom also opened a new flavours plants in Shanghai, China that aimed to foster its R&D efforts through an advanced laboratory.
“We will also work on building a modern production site in Ho Chi Minh City, greatly increasing production capacity which will allow us to continue accelerating our growth in Vietnam and the growing countries of the Southeast Asia region,” added Yehudai.
A progressive strategy
Moving forward, "we are working on finding and making further strategic acquisitions of companies and activities in our fields of operations, with special emphasis on markets with high rates of growth in Asia, Central and South America, Central and Eastern Europe and in Africa”, Yehudai concluded.
In recent years, its specialist fine ingredients activity has supported a rapid growth strategy combining internal growth with multiple acquisitions in a bid to reach sales targets of $2 bn (€1.87 mn) by the year 2020.
The transaction is expected to be finalised in the coming weeks.