Foreign rivals eye Israel's Frutarom: media

TEL AVIV/FRANKFURT (Reuters) - Two overseas companies recently approached Israel's Frutarom Industries FRUT.TA regarding the possibility of acquiring the flavors and fine ingredients maker, financial news website Calcalist reported on Wednesday.

Frutarom said in a statement in response to the report that it had not reached any agreements about a possible deal.

Frutarom has a market value of $5.5 billion and any acquisition deal could be worth $6 billion-$6.5 billion, Israel's Calcalist said, adding that one of the interested companies was U.S.-based International Flavors & Fragrances IFF.N, the No. 2 player in the sector.

It did not name the other company, but TheMarker, another website, said Germany's Symrise SY1G.DE was interested.

A spokesman for Symrise, whose biggest acquisition was French group Diana for 1.3 billion euros ($1.6 billion), declined to comment.

An IFF spokesman said it was the company’s policy not to respond to speculation and rumors.

The report sent Frutarom’s shares up 7 percent in Tel Aviv.

In a statement to the Tel Aviv Stock Exchange, Frutarom said it held talks from time to time regarding possible strategic measures, including via a merger or acquisition.

“The company has not reached any agreements with any party regarding a deal and there is no certainty that such talks will lead to an agreement for a deal or what the terms would be,” it said. “The company continues to focus on achieving its business targets.”

Geneva-based Givaudan GIVN.S said last month it planned to launch an offer for French natural ingredients group Naturex NATU.PA after agreeing to buy a half-billion euro minority stake in the firm.

Givaudan is the market leader, ahead of peers such as Firmenich, IFF, Symrise, Takasago and Mane.

Two bankers familiar with the industry said the flavors and fragrances sector was expected to see consolidation in coming months.

“Everyone is talking to everyone, and that also involves Frutarom,” one of the people said.

Frutarom itself has been growing through a steady stream of acquisitions in recent years, having bought 12 firms in 2017.

As Frutarom has managed the acquired firms at arm’s length, some potential buyers are deterred by what they view as an overly complex corporate structure.

While a grab for market share by one of the top players of the industry cannot be ruled out, moves by consumer goods producers entering the industry are also a possibility, the sources added.

Frutarom reported a 23.7 percent rise fourth-quarter sales to a record $357.5 million. The company expects 2018 to be another record year. It is targeting $2.25 billion in sales by 2020.

Additional reporting by Patricia Weiss in Frankfurt; Editing by Susan Fenton, Jason Neely and Mark Potter