International Flavors & Fragrances Inc.
) acquired privately-held Aromor Flavors and Fragrances Ltd., the
financial terms of which were not disclosed. The acquisition has
been funded wholly by the company's existing resources.
Israel-based Aromor is a specialist in producing and selling
complex specialty ingredients used especially in the perfume,
cosmetics and food industries. Founded in 1982, the company had
roughly 90 employees.
The acquired assets of Aromor Flavors and Fragrances will be
integrated into the company's Fragrances Ingredients business.
Also, Aromor has an estimated $35 million revenue generation
capacity and is expected to be accretive to International Flavors
& Fragrances' 2014 earnings per share.
We believe the acquisition is consistent with International
Flavors & Fragrances' expansionary policy. The company has
long been investing in acquisitions to gain access to new
customers, regions or technologies. A diverse portfolio and
product mix along with new business wins should help the company
deliver solid results in the quarters ahead.
Over the long term, International Flavors & Fragrances hopes
to achieve around 4%-6% local currency sales growth and over 10%
earnings per share growth. Sales growth at Flavors and Fragrances
is anticipated to be 2%-3% above industry growth. Emphasis will
be given on capital spending over the years to seize upon
opportunities in the emerging markets. As a percentage of sales,
capital spending is anticipated to be roughly 4%-5% in 2013-2015
and roughly 3% in 2016-2018.
The Zacks Consensus Estimate for International Flavors &
Fragrances is currently pegged at $4.46 and $4.90 for 2013 and
2014, respectively. These consensus estimates represent
year-over-year growth of 12.1% in 2013 and 9.8% in 2014. In the
next five years, earnings are estimated to grow 8.5%.
International Flavors & Fragrances currently has a market
capitalization of $7.1 billion and carries a Zacks Rank #3
(Hold). Some better-ranked companies in the industry include
HB Fuller Co.
Globe Specialty Metals, Inc.
). All these companies carry a Zacks Rank #2 (Buy).
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