Glanbia, an Irish food corporation, revealed on Monday plans to buy Flavor Producers, a company based in the United States, for an initial sum of $300 million (€281 million). Following successful negotiations with Aroma Holding Company and other entities which hold ownership of the California-based firm, Glanbia made the announcement. There is a provision for an additional deferred payment of up to $55 million, dependent upon the performance results in 2024. The final total would also be influenced by actual working capital value and typical completion accounts at the time of closing.
To finance the acquisition, Glanbia will utilise its pre-existing banking facilities and cash reserves. The Kilkenny-headquartered company concluded last year with a robust balance sheet bearing a net debt of $248.7 million. It reported a net debt to earnings before interest, taxes, depreciation, and amortisation (EBITDA) ratio of 0.5 times, in addition to $1.3 billion in committed debt facilities available.
It is projected that the transaction will finalise in the first half of 2024, subject to traditional closing conditions and agreed completion accounts. Glanbia anticipates a positive impact on its adjusted earnings per share during its initial year of ownership. The company’s existing buyback programme valued at €100 million, declared on February 28th, will remain independent of this arrangement.
Established in 1981, Flavor Producers is a family-run business in Valencia, California, specialising in plant-based flavour and extract manufacturing. The company is a top contender in the North American market for natural and organic flavours.
Flavor Producers generated $86.1 million in net sales and adjusted EBITDA (excluding one-off costs) of $19.7 million, in the twelve months up to February 2024. The gross assets as of February 2024 were valued at $321 million.
Following the acquisition, Glanbia plans to incorporate Flavor Producers into its Glanbia Nutritionals, Nutritional Solutions business division. This is in agreement with Glanbia’s expansion strategy to acquire firms that complement and enhance its range of Better Nutrition platforms.
This acquisition of Flavor Producers significantly broadens the flavours portfolio of Nutritional Solutions. By doing so, it unlocks new potential in the promising natural and organic flavours market that aligns with enduring consumer trends.
Hugh McGuire, Glanbia’s chief executive, has expressed his satisfaction with the recently concluded deal. In his words, the acquisition not only strengthens their current flavours proficiency but also sets up the company in a favourable position to tap into future growth prospects within organic and natural flavour segments.
For Glanbia, mergers and acquisitions form a crucial part of their expansion plan. As per McGuire, this deal epitomises yet another opportunity for them to augment their Nutritional Solutions venture, realise synergies and inherit one-of-a-kind and harmonious skills.