Glanbia to acquire Flavor Producers for €281m
It is anticipated that the Transaction will close in the first half of FY 2024 subject to customary closing conditions and agreed completion accounts
Print15 April 2024
Glanbia plc, the Better Nutrition company, have announced that it has entered into an agreement with the shareholders of Aroma Holding Company, LLC and related entities, the owners of Flavor Producers LLCto acquire the business for an initial consideration of $300 million (€281 million) plus deferred consideration (the “Transaction”).
Transaction overview and rationale
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. 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 $300 million (€281 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. Glanbia has a strong balance sheet with net debt of $248.7million (€233.3 million) at the end of FY 2023, a net debt to adjusted EBITDA ratio of 0.5 times and $1.3 billion (€1.2 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 €100 million buyback programme announced on 28 February 2024 is ongoing and is unaffected by this Transaction.
In the 12 months to February 2024, Flavor Producers delivered $86.1 million (€80.7 million) net sales and adjusted EBITDA (before non-recurring costs) of $19.7 million (€18.4 million). The gross assets of Flavor Producers as at February 2024 were $321 million (€301 million).
Hugh McGuire, chief executive officer, Glanbia, 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 segments. M&A is an important part of our growth strategy and this Transaction represents a further opportunity to scale our NS business, unlock synergies and acquire unique and complementary capabilities.”
Read more: Glanbia delivers ‘excellent performance’ in 2023
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