Glanbia agrees to acquire
Flavor Producers for initial consideration of $300
million
15
April 2024. Glanbia plc ("Glanbia"
or the "Company"), the Better Nutrition company, is pleased to
announce that it has entered into an agreement with the
shareholders of Aroma Holding Company, LLC and related entities,
the owners of Flavor Producers LLC ("Flavor Producers") to acquire
the business for an initial consideration of $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.
Commenting on the Transaction, Hugh McGuire, Chief Executive
Officer of Glanbia said:
"I am
delighted to announce the acquisition of Flavor Producers, which
represents an important step in the continued growth of our
Nutritional Solutions business. 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."
Transaction consideration,
financing and closing
The initial consideration 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. Glanbia has a strong balance sheet
with net debt of $248.7million at the end of FY 2023, a net debt to
adjusted EBITDA ratio of 0.5 times and $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 €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 $86.1
million net sales and adjusted EBITDA (before
non-recurring costs) of $19.7 million. The
gross assets of Flavor Producers as at February 2024 were
$321 million.
ENDS
For further information
contact:
Glanbia plc
Mark Garvey, Chief Financial
Officer
Liam Hennigan, Group Secretary &
Head of Investor Relations +353 86 046
8375
Martha Kavanagh, Director of
Corporate Affairs
+353 87 646 2006
Cautionary statement
This announcement contains
forward-looking statements. These statements have been made by the
Directors in good faith based on the information available to them
up to the time of their approval of this announcement. Due to the
inherent uncertainties, including both economic and business risk
factors underlying such forward-looking information, actual results
may differ materially from those expressed or implied by these
forward-looking statements. The Directors undertake no obligation
to update any forward-looking statements contained in this
announcement, whether as a result of new information, future
events, or otherwise.