Glanbia signs deal to acquire Flavor Producers LLC for upto $355 million

LONDON, UK: Glanbia plc has entered into an agreement with the shareholders of Aroma Holding Company, LLC and related entities, the owners of Flavor Producers LLC to acquire the business for an initial consideration of $300 million plus deferred consideration.

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 Plc will operate Flavor Producers within its Glanbia Nutritionals (GN), Nutritional Solutions business.

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.

Flavor Producers is a leading independent flavours business in the US which represents a synergistic fit with the existing flavours capability of NS. The acquisition is 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.”

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.

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.

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