Glanbia, a company specialising in developing nutritional products for the consumer market, has announced its agreement with the shareholders of Aroma Holding Company and related entities – the owners of Flavor Producers – to acquire the business for an initial consideration of USD $300m plus deferred consideration.
Transaction overview and rationale
Flavor Producers is a US platform providing flavours and extracts to the food and beverage industries, with a focus on organic and natural ingredients. Glanbia will operate Flavor Producers within Nutritional Solutions (NS).
The Transaction is consistent with Glanbia’s strategy of acquiring complementary businesses to grow its Better Nutrition platforms. Flavor Producers significantly expands NS’s flavour offerings, bringing new capabilities in the attractive and growing natural and organic flavours market which are aligned with long term consumer trends.
Hugh McGuire, CEO of Glanbia commented: “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.”
Transaction consideration, financing and closing
The initial consideration is $300m with an additional deferred payment of up to $55m, 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 $248.7m at the end of FY 2023, a net debt to adjusted EBITDA ratio of 0.5 times and $1.3bn of committed debt facilities.
It’s 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.