Israeli flavorings and specialty ingredients company Frutarom Industries will acquire 75 percent of Russia's Protein Technologies Ingredients (PTI) for $50.3 million in cash.
The agreement includes an option for Frutarom to purchase the remaining 25 percent held by Vantodio Holdings of Cyprus within three years, Frutarom said on Monday.
PTI had sales in 2012 of $111 million and earnings before interest, tax, depreciation and amortisation of $10.5 million. It has net assets of $40 million and no debt.
Established in 1996, PTI makes flavours, spice mixes and raw materials for the food industry, including specialty protein, with an emphasis on processed meat and convenience foods. Its savoury flavour sales reached $60 million in 2012, with operating margins similar to Frutarom's flavour activity margins.
PTI has two production sites near Moscow and a research and development, distribution and sales centre in Moscow. It employs about 500 workers. Three of PTI's founders will continue in their positions in the company and as shareholders.
PTI's activity is largely synergetic to Frutarom's global savoury business, which grew substantially over the last few years due to several acquisitions, Frutarom said. The acquisition of PTI will enable Frutarom to expand the range of savoury products and broaden its activity and market share in developing and developed countries, it said.
"The combination of a local manufacturer supported by a global company should create significant advantages in the Russian market which, according to analysts, is expected to grow by up to 10 percent annually in the next few years - higher than the projected growth rates in Central Europe and the United State," Ori Yehudai, president of Frutarom, said.
"We are convinced that this acquisition will further enhance the rapid growth and profitability of the Frutarom group."
The acquisition agreement is in final signing stages and Frutarom estimates the deal will be completed in the coming days. The acquisition will be funded by bank financing.
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