Glanbia is set to acquire a US-based flavours and extracts business for an initial consideration of €300 million.
Glanbia announced today (April 15) that it has entered into an agreement with the shareholders of Aroma Holding Company and related entities, the owners of Flavor Producers, to acquire the business.
Flavor Producers is a flavour platform in the US, providing flavours and extracts to the food and beverage industries, with a focus on organic and natural ingredients. The business has an over 40-year history in the sector.
Glanbia will operate Flavor Producers within its Glanbia Nutritionals and Nutritional Solutions business.
Glanbia said that the transaction is consistent with its strategy of acquiring complementary businesses to grow its “Better Nutrition” platforms.
Flavor Producers “significantly expands” Glanbia’s Nutritional Solutions flavours offering, the Irish business said, adding that the transaction brings “new capabilities in the attractive and growing natural and organic flavours market”, which Glanbia said are aligned with long term consumer trends.
Flavor Producers was founded in 1981 as a family business in Valencia, California. According to Glanbia, the US business pioneered the development of natural and organic flavours by sourcing “raw materials from nature”. Plant-based flavour and extract creation is the company’s specialty.
In the 12 months to February 2024, Flavor Producers delivered $86.1 million net sales and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $19.7 million. The gross assets of Flavor Producers as at February 2024 were $321 million.
The initial consideration of the transaction is $300 million with an additional deferred payment of up to $55 million, conditional on performance in 2024. Final consideration will also be impacted by the value of actual working capital and customary completion accounts at closing.
The transaction will be financed by Glanbia’s existing banking facilities and cash, the business said.
It is anticipated that the transaction will close in the first half of 2024, subject to the customary closing conditions and agreed completion accounts.
Glanbia said its current €100 million buyback programme announced on February 28 is ongoing and is unaffected by this transaction.
Commenting on the deal, Glanbia chief executive officer (CEO) Hugh McGuire said: “This acquisition builds on our existing flavours capability and positions us well to capture long-term growth opportunities in the organic and natural flavours [sectors].”