Below is the immediate report submitted today to the Israeli Securities Authority ("ISA") and the Tel-Aviv Stock Exchange through the ISA's electronic submission system in accordance with the Securities Regulations (Periodic and Immediate Reports), 1970.
Frutarom Industries Ltd.
("Company")
Registration No.: 52-004280-5
The securities of the Company are listed for trading on the Tel-Aviv Stock Exchange
Name: Frutarom
25 HaShaish St., P.O.B. 10067, Haifa 26110
Tel: +972-4-846 2401, Fax: +972-4-872 2517, www.frutarom.com
Email: kbenari@frutarom.com
January 17, 2012
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Israeli Securities Authority |
Tel Aviv Stock Exchange Ltd. |
Immediate Report
Nature of the Event: Acquisition of Flavors Company in Slovenia
Frutarom Industries Ltd. ("Frutarom" or the "Company") hereby announces that yesterday it signed an agreement to acquire approximately 56% of the share capital of the Slovenian public company ETOL Tovarna arom in eteričnih olj d.d. ("Etol"). The acquisition was performed outside the Slovenian stock exchange in return for an overall sum of Euro 19,643,444. The Company intends to make a bid on the Slovenian stock market for the purchase of the remaining shares in the coming weeks. If the bid is accepted in full, Frutarom will own all of Etol's share capital.
The price was determined on the basis of the value of Etol's assets, its representative operational profitability, its growth in sales, its assets, including equipment, real-estate property which includes land and buildings in the city of Sofia Vas and additional land reserves for future expansion, customers, know-how, technology and Etol's long standing goodwill in many countries in the region. The acquisition was performed through a Frutarom subsidiary in Switzerland. The acquisition of approximately 31.6% of Etol's share capital was completed shortly following the signature, including payment for this, and acquisition of the remaining 24.4% will be completed in the coming days, including payment for this, subject to the court's approval of the transfer of shares. The acquisition was fully financed through short term bank financing with interest of LIBOR + 1.75%. No changes have been made in the financial covenants undertaken by the Company.
Etol, founded in 1924, is a flavor company dealing in development, manufacture and marketing of taste solutions, focusing on natural flavor products for the food and beverage industry. Etol also has great experience in the development and manufacture of fruit based flavors and products and food systems, specializing in local fruits of the region, as well as extensive activities in the area of plant bases for beverages, in which Frutarom intends to significantly invest and expand activities Etol, together with its subsidiaries ("the Etol Group"), employs some 240 employees, including in research and development and sales, and an experienced management team. Etol has a development, manufacturing and marketing site in Sofia Vas, Slovenia, in which it has invested widely over the past few years in order to allow expansion, development and integration of innovative technologies in the area of flavors, as well as additional real estate properties for future expansion. Etol's products are sold to a wide customer base in Central- and Eastern Europe and in emerging markets, with an emphasis on Russia, Poland, the Ukraine, Turkey, Croatia, Serbia, Slovakia, Belarus, Hungary, Macedonia, the Czech Republic, Kazakhstan and other developing countries.Leading food and beverage manufacturers in the countries it operates in number among Etol's customers, including large multi-national food companies.
Etol's activities are synergetic with Frutarom's activities. It is the Company's estimate that the acquisition of Etol is expected to significantly increase Frutarom's customer base and scope of sales in emerging markets, expanding its product portfolio and deepening Frutarom's operations and market segment in these markets. It is Frutarom's intention to utilize Etol's development, sales and production capacity for the development of its business in the region.
To the best of the Company's knowledge, Etol is not a related body to Frutarom and there are no restrictions by law or legal arrangements relating to the owners of the property restricting the use thereof. No taxes or fees apply with respect to the acquisition.
To the best of the Company's knowledge, Frutarom's interested parties have no personal interest in the acquisition.
Between the years ending 31 December 2006 and 31 December 2010, Etol Group's sales turnover grew by 46%. During the years ending 31 December 2009 and 31 December 2010, the Etol Group's sales turnover grew by 7% of its consolidated revenues of approximately €42.9 million (US$59.9 million) to revenues of approximately €46.0 million (US$61.1 million), respectively. During the nine months ending September 30, 2011, the Etol Group's sales turnover grew by 7% as compared to the same period in 2010, reaching €38.6 million (US$54.3 million).
The EBITDA in 2009 stood at approximately €8.2 million ($11.4 million), and in 2010 at approximately €8.4 million ($11.1 million), neutralizing one-time expense of approximately €1.6 million (€6.8 million before neutralizing the one-time expense). The consolidated equity capital of Etol Group as of September 30, 2011 stood at approximately €28.9 million (approximately $39.3 million). Etol's financial reports are compiled under IFRS standards.
This report includes forward-looking statements, as defined by the Israeli Securities
Law - 1968, including with regards to the Company's intention to perform a bid for the acquisition of Etol's remaining shares, The Company's estimate with regards to the acquisition's contribution to Frutarom and its plan with regards to the acquired asset. This forward-looking statement includes, inter alia, data, forecasts, goals, objectives, and/or other information relating to future events or circumstances which may or may not be realized and which are not solely in Frutarom's control.
These forward-looking statements are based on estimates determined by Frutarom's management which are determined, among others, by the information available to the management at the time of publication, including estimates relating to the activities of Frutarom, objectives, goals, strategies, events and future intentions.
By their nature, forward-looking statements involve risk and uncertainty and are not guarantees of future performance. The realization or lack thereof of forward-looking statements will be determined by risk factors that characterize Frutarom's activities, changes in the environment and external factors that exert influence upon the Frutarom Group (including Etol) and its activities.
Date and time at which the Company was first made aware of the event: January 16, 2012 at 19:30.
Sincerely Yours,
Tali Mirsky, Adv.
VP Legal Affairs and Corporate Secretary
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