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News 14.05.2024

Glanbia agrees to acquire Flavor Producers for initial consideration of USD 300 million

Glanbia plc, the Better Nutrition company, announced that it has entered into an agreement with the shareholders of Aroma Holding Company, LLC and related entities, the owners of Flavor Producers …

Glanbia agrees to acquire Flavor Producers for initial consideration of USD 300 million
(Photo: Glanbia)

Glanbia plc, the Better Nutrition company, announced that it has entered into an agreement with the shareholders of Aroma Holding Company, LLC and related entities, the owners of Flavor Producers LLC to acquire the business for an initial consideration of USD 300 million plus deferred consideration (the “Transaction”).

Transaction overview and rationale

Flavor Producers is a leading flavour platform in the US, providing flavours and extracts to the food and beverage industries, with a focus on organic and natural ingredients. Glanbia will operate Flavor Producers within its Glanbia Nutritionals (“GN”), Nutritional Solutions business (“NS” or “Nutritional Solutions”).

The Transaction is consistent with Glanbia’s strategy of acquiring complementary businesses to grow its Better Nutrition platforms. Flavor Producers significantly expands NS’s flavours offering, bringing new capabilities in the attractive and growing natural and organic flavours market which are aligned with long term consumer trends.

Transaction highlights include:

  • Flavor Producers is a leading independent flavours business in the US which represents a synergistic fit with the existing flavours capability of NS;
  • Acquiring an established platform with a 40 year plus history, a strong team and a track record of innovation;
  • Excellence in R&D and proprietary ingredients with best-in-class formulation capabilities. Extensive flavour library and vertical integration into flavour extracts, facilitating clean label solutions;
  • Financially attractive margin and growth profile which will improve business mix within NS; and
  • Consistent with Glanbia’s balanced capital allocation framework and retaining a strong financial position post Transaction.
  • Transaction consideration, financing and closing

The initial consideration is USD 300 million with an additional deferred payment of up to USD 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. Glanbia has a strong balance sheet with net debt of USD 248.7million at the end of FY 2023, a net debt to adjusted EBITDA ratio of 0.5 times and USD 1.3 billion of committed debt facilities.

It is anticipated that the Transaction will close in the first half of FY 2024 subject to customary closing conditions and agreed completion accounts.

The Transaction is expected to be marginally accretive to Glanbia’s adjusted earnings per share in its first full year of ownership.

The Company’s current EUR 100 million buyback programme announced on 28 February 2024 is ongoing and is unaffected by this Transaction.

About Flavor Producers
Flavor Producers was founded in 1981 as a family business in Valencia, California. They 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, with unique technologies that deliver transparently delicious taste to food and beverages. Today, Flavor Producers is a leading developer and manufacturer of natural and organic flavours in North America. Flavor Producers serves leading FMCG companies as well as high growth and emerging consumer brands.
In the 12 months to February 2024, Flavor Producers delivered USD 86.1 million net sales and adjusted EBITDA (before non-recurring costs) of USD 19.7 million. The gross assets of Flavor Producers as at February 2024 were USD 321 million.

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