The U.S. company International Flavors & Fragrances, whose products are used to give a scent and taste to consumer products, said on Thursday that it had purchased Aromor Flavors & Fragrances, a company operating out of Kibbutz Givat Oz and half owned by the kibbutz.
IFF did not say how much it paid for Aromor, but industry sources estimated the U.S. company paid around $88 million. IFF said Aromor, which makes natural, natural-identical and synthetic aromas and flavorings for the perfume, cosmetics and food industries, would have added about $35 million in sales last year had it already been a part of the company.
“We believe the use of the Aromor ingredients portfolio and their technology-development process will be value enhancing by improving the overall profitability and win rate of our fragrance creations,” said Nicolas Mirzayantz, IFF’S group president for fragrances. “We plan to continue to support the Aromor facility in Israel and invest in and develop their research and development and manufacturing capabilities in order to strengthen the development and production of specialty ingredients.”
The global aromatics market is relatively small but highly profitable, with products selling for hundreds to thousands of dollars per kilogram. Aromor has been growing rapidly in a rapidly expanding industry, with an average annual growth rate over the past six years of 24.5%. Sales in 2013 were $50 million. IFF has been Armor’s biggest customer, accounting for 17% of its revenues.
Aromor, which is half owned by a group of former executives of the agrochemicals producer Makhteshim Agan, will continue to operate on the kibbutz, which is located in northern Israel near the town of Afula. As part of the acquisition, IFF will lease the land under the Aromor factory for 10 years with an option to extend the lease by another 10 years.
Founded 1982, Aromor has 85 employees, 23 of them members of the kibbutz. In 2002, Karen Cohen Khazon, now the company’s CEO, and Daniel Porat, a former Makhteshim vice president, purchased a 30% stake in Aromor for $5 million. They increased their holding to 50% five years later, with other former Makhteshim executives joining the investment group. IFF, whose shares are in the Standard & Poor’s 500 index, has approximately 5,900 employees working in 32 countries worldwide.