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Frutarom Industries (FRUT)

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Tuesday 08 May, 2018

Frutarom Industries

Immediate Report - execution of a Merger Agreement

RNS Number : 2493N
Frutarom Industries Limited
07 May 2018

Below is the immediate report submitted today to the Israeli Securities Authority ("ISA") and the Tel-Aviv Stock Exchange through the ISA's electronic submission system in accordance with the Securities Regulations (Periodic and Immediate Reports), 1970.



Frutarom Industries Ltd.

("Company" or "Frutarom")

Registration No.:  52-004280-5

The securities of the Company are listed for trading on the Tel-Aviv Stock Exchange

Name:  Frutarom

2 Hamenofim St, Building A, Herzelia 4672553

Tel:  +972-9-960 3800, Fax:  +972-9-960 3826,

Email: [email protected]



  May 7, 2018


Israeli Securities Authority

Tel Aviv Stock Exchange Ltd.




Immediate Report with respect to the execution of a Merger Agreement


In accordance with Regulation 36(a) of the Securities Regulations (Periodic and Immediate Reports), 5730-1970, Frutarom is pleased to hereby announce that following the approval of the Boards of Directors of the parties on May 6, 2018:


1.   On May 7, 2018, an Agreement and Plan of Merger (the "Merger Agreement") was entered into among the Company, International Flavors & Fragrances Inc., an international public company whose securities are listed for trading on the New York Stock Exchange (NYSE: IFF) (the "Purchaser" and "NYSE", respectively) and on the Euronext Paris Stock Exchange (Euronext Paris: IFF), and Icon Newco Ltd., a private company incorporated under the laws of the State of Israel that is wholly-owned by the Purchaser ("Merger Sub").

2.   The Purchaser, incorporated 129 years ago, is a leading global manufacturer of flavors and fragrance extracts, employs more than 7,000 employees, and has over 3,000 customers in over 160 countries. The Purchaser's revenues in 2017 were approximately US$ 3.4 billion.

3.   Under the Merger Agreement, a reverse triangular merger (the "Merger" or the "Transaction") shall take place, pursuant to which, upon closing, Merger Sub shall be merged with and into the Company (as the surviving company), such that for each Ordinary Share, par value NIS 1.00, of the Company immediately prior to the consummation of the Merger (the "Closing"), the Purchaser shall (a) pay a cash amount of US$ 71.19 (the "Cash Consideration"); and (b) issue 0.249 shares of the Purchaser's common stock, based on the volume weighted average price of the Purchaser's shares during the last 10 trading days ended May 4, 2018 (inclusive) (the "Equity Consideration", and together with the Cash Consideration, the "Merger Consideration"). The Merger is expected to be consummated within 6 to 9 months from the signing date, subject to the conditions set forth below.

4.   The Merger Consideration reflects, as of the signing date, a price per share of approximately US$ 106.25 (approximately NIS 386, calculated on the basis of the Dollar-NIS representative exchange rate and the Purchaser's price per share, in each case on the date proximate to the signing date of the Merger Agreement (i.e., May 4, 2018), a premium of approximately 13.1% on the volume weighted average price per Company share on the Tel Aviv Stock Exchange over the last 30 trading days prior to the signing date of the Merger Agreement and a premium of approximately 11.6% on the price per Company share on the Tel Aviv Stock Exchange on May 6, 2018.

5.   Following the Merger, the Company shall become a wholly-owned subsidiary (100%) of the Purchaser, and its security holders shall be issued approximately 18.6% of the issued and outstanding share capital of the Purchaser (assuming that until the Closing the Purchaser does not issue any additional shares).

6.   All options to purchase shares of the Company that had not expired prior to Closing shall expire at Closing, where (a) in consideration for vested options, an option holder shall be entitled to the Merger Consideration set forth in Section 3 above, less the exercise price of such options, and (b) unvested options shall be converted into the right to receive the Merger Consideration set forth in Section 3 above in cash (in which the Equity Consideration shall be converted to cash in accordance with the volume weighted average price per Purchaser share over the 10 trading days prior to Closing), less the exercise price of the options. The cash amount shall be paid to the option holder in accordance with the vesting schedule of the options.

7.   The Merger reflects a Company valuation of approximately US$ 6.37 billion, on a fully-diluted basis, and an enterprise value (taking into account estimated amount of the Company's net debt) of approximately US$ 7.1 billion.  

8.   Over the last three decades, Frutarom, under the management of Ori Yehudai, experienced a profitable growth journey, increasing revenues from US$ 10 million in 1990 to estimated sales in excess of US$ 1.6 billion in 2018, with a significant increase in profit and improvement of its profitability. The average annual growth rate of Frutarom's revenues and profits since 2000 is estimated at approximately 20%. Frutarom's growth is based on the successful implementation of a strategy that combines profitable internal growth, of double the growth rate of the markets in which Frutarom operates, with strategic acquisitions. These factors resulted in a consistent improvement in the results of operations and the value that Frutarom creates to its shareholders, which is reflected in the doubling of Frutarom's sales and profits over each 4-year period since 2000.

9.   The Merger is not contingent on financing, and the Purchaser intends to fund the Cash Consideration from its own cash resources, and by raising debt in addition to new equity in a total amount of approximately US$ 2.2 billion. To complete the Transaction, the Purchaser has obtained the commitment of Morgan Stanley Senior Funding Inc. to provide a bridge credit facility.

10. Pursuant to the Merger Agreement, the Purchaser shall act to list its shares for trading on the Tel-Aviv Stock Exchange by way of "dual listing" prior to the Closing, and shall also act to register the Purchaser's shares to be issued pursuant to the Merger Agreement (the Equity Consideration) on the New York Stock Exchange.

11. According to the Merger Agreement, the Company shall declare, immediately prior to the Closing, a dividend to its shareholders in an amount per share equal to the aggregate amount of dividends per share declared by Purchaser with respect to which the record dates took place during the period between signing and Closing, times 0.249 (the conversion rate pursuant to which the Equity Consideration was calculated).

12. In the Merger Agreement, the Purchaser stated that it intends to maintain the Company's R&D and manufacturing in Israel for a period of no less than 3 years from the Closing, at a scope similar to the Company's R&D and manufacturing in Israel immediately prior to the consummation of the Merger.

13. In connection with the Merger the Company shall procure, prior to Closing, D&O runoff insurance to provide insurance coverage to the directors and officers of the Company with respect to the period prior to Closing, which shall be in effect for a period of 7 years following the Closing.

14. The Merger Agreement is subject to the satisfaction of standard conditions set forth in the Merger Agreement, including the following principal conditions: (a) the approval of the Merger by the Company's shareholders meeting; (b) the Purchaser's shares shall be approved for registration on the New York Stock Exchange; (c) receipt of regulatory approvals of the Merger required under applicable law, including Antitrust Laws.

15. The Board of Directors of the Company, in its meeting of May 6, 2018, unanimously approved the Merger. The Board of Directors believes that the Merger is in the best interests of the Company, and has unanimously resolved to recommend to the Company's shareholders to approve the Merger. The Board's explanations for approving the Merger shall be set forth in a detailed report that shall be made available to the Company's shareholders together with the notice of a general meeting.

16. Concurrently with the execution of the Merger Agreement, the controlling shareholder of the Company undertook to the Purchaser to vote its shares in favor of the approval of the Merger in the Company's General Meeting that shall be convened to approve the Merger, such undertaking shall be in force and effect only for as long as the Merger Agreement is in force, and the Board has not withdrawn its recommendation to the shareholders of the Company to vote for the Merger.

17. Following the consummation of the Merger, the Purchaser shall hold all the issued and outstanding share capital of the Company, the Company shall cease being a public company, its shares shall be delisted from trade and it shall cease being a Reporting Company as such term is defined in the Securities Law, 5728-1968.


It is the Company's intention to circulate in the near future a detailed report of a material merger, pursuant to which the General Meeting of the Company shall be convened for purpose of among other things approving the Merger Agreement, which shall include all details of the Merger.


It is hereby clarified that this immediate report does not constitute an offering of the Purchaser's securities to the public in Israel.


The Company wishes to emphasize that at this stage, prior to the convening of the General Meeting and the satisfaction of the conditions set forth in the Merger Agreement, there is no certainty that the Merger shall be approved or be consummated upon the terms set forth above.


The foregoing immediate report was delayed by the Board of Directors of the Company since its release prior to signing of a definitive agreement could have prevented the signing of the Merger Agreement and the closing of the Transaction, or the adversely affected its terms. The date on which the right of the Board to delay such report expired is May 7, 2018, 07:00 am, the date of execution of the Merger Agreement.


Today on 03:00 pm (Israel time) the Company and the Purchaser shall hold a conference call for investors. Investors can connect to the conference call on:  )973) 935-2840 conference code: 1788618. In addition, a recording shall be available on the Company's website following the call.





Sincerely yours,


Frutarom Industries Ltd.



By: Guy Gill, VP Finance

This information is provided by RNS
The company news service from the London Stock Exchange

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