On the Street - Frutarom Buys American

March 11/Business & Finance Week -- Frutarom Industries Ltd. signed an agreement to acquire the assets and business of the American Company Flavors Specialties Inc. (FSI), which has activities also in Central and South America, for a cash payment of $17.2 million. The acquisition agreement determines a future upwards or downwards earn-out mechanism, based on the average EBITDA generated by FSI during the 24 months ending December 31, 2010, multiplied by 5.5. In accordance with the earn-out mechanism, total consideration could increase up to a maximum of $27 million or decrease to $3.15 million. The upwards earn-out payment will be paid (by Frutarom) for average EBITDA in excess $3.1 million and the downwards EBITDA will be paid (to Frutarom) for averaged EBITDA below $2.7 million. In 2008, FSI's sales totaled approximately $11.5 million. In 2007, FSI's sales totaled approximately $11.2 million. The acquisition will be financed through bank loans.

Established in 1979, FSI is a flavor and botanical extracts company that develops, produces and markets flavors and botanical extracts mainly for the food and beverage industry. FSI has a production site in Corona, Cal., and it employs some 38 employees.

According to Ori Yehudai, president and chief executive officer of Frutarom, "This acquisition, which is an additional step in the implementation of Frutarom's rapid growth strategy and of realizing its vision, 'To be the preferred partner for tasty and healthy success,' is an important strategic acquisition that implements our plan to strengthen Frutarom's geographical presence in the flavors field in the American Continent, and mainly in the U.S., and supports the further strengthening and positioning of Frutarom, which is already today one of the ten largest companies in the world in the flavors field." Yehudai added, "Thanks to Frutarom's proven experience in making acquisitions and in realizing the synergy and cross selling opportunities, we are convinced that this acquisition will contribute to Frutarom's continued fast growth and profitability and will create high value for our customers, our employees and our investors."

FSI's three founders and its management will be integrated into Frutarom USA to lead the flavors activities in America.

Yehudai added, "Frutarom intends to take advantage of our global marketing and sales infrastructure to leverage and realize the many cross selling opportunities created by this acquisition, by broadening both the customer base and the product portfolio."

According to Yehudai, Frutarom continues to implement its rapid growth strategy combining organic growth in its core activities, at rates above the industry average, with strategic acquisitions. Frutarom continues working to identify and implement additional strategic acquisitions of companies and activities and believes that its solid capital structure and its ability to generate cash from operating activities, together with available credit lines from leading banks in the world, will enable it to utilize acquisition opportunities created due to the global economic crisis.

From the March 16, 2009, Prepared Foods E-dition