Danisco buys Belgian flavouring company Perlarom

- Last updated on GMT

Related tags: Danisco, Flavor, Alcoholic beverage

Danisco announced its acquisition of Belgian-based flavouring
company Perlarom, boosting its position in Europe to the sixth
largest flavourings manufacturer. It said its flavour sales
worldwide will amount to around €240 million after the acquisition.

Danisco announced its acquisition of Belgian-based flavouring company Perlarom, boosting its strong position in the US, the UK and Scandinavian flavours markets. It said its flavour sales worldwide will amount to around €240 million after the acquisition.

Headquartered in Louvain-La-Neuve, Belgium, Perlarom​ has net sales of €47 million and ranks among the top ten flavour manufacturers in Europe. The acquisition strengthens Danisco's sales position in Europe, moving it from the European number ten to number six within Europe's flavours sales, said the company.

The Belgian company employs 260 people, generating most of its sales in Europe. It has four production sites and ten subsidiaries around the world and will supply Danisco​ with a flavour sales network, marketing expertise, manufacturing capacity and R&D facilities.

Alf Duch-Pedersen, Danisco's CEO, said : "With Perlarom's and Danisco's combined product expertise we're now able to offer the beverage industry an outstanding product portfolio. We're now the number three player in flavours for beverages in Europe. This is the segment where we see the highest growth on the world market today - exceeding the average growth in the industry of approximately four per cent. We therefore expect the Perlarom business to bring us further growth in this segment in the coming years."

He added: "We will use Danisco's extensive worldwide sales network to promote and sell this new variety of products that we have acquired. With this acquisition, Danisco has obtained a perfect position that will strengthen our organic growth."

The world market for flavours is estimated at approximately €5.5 billion, the European market accounting for just over one third. R&D activities amounts to around eight per cent of Perlarom's net sales, it said. Its sweet and savoury flavours are used in soft drinks, dairy products, confectionery, alcoholic beverages and bakery products.

Elaborating on the acquisition, Danisco said that strong synergies of €6 -7 million annually have been identified and are expected to be realised within the next three years. Synergies will be realised through optimisation of the organisation and accelerated sales growth, elimination of certain future investments and better purchasing possibilities.

The company added that there will be a positive effect on earnings per share as from next financial year (2003/04). In the financial year 2002/03 there will be a one-off cost of approximately €5 million relating to integration.

The price on a debt-free basis corresponds to around 13 times EBITDA (€6 million in 2001) and 20 times EBITA (€4 million in 2001) based on the calendar year 2001. Around 75 per cent of the purchase price is goodwill.

The acquisition will fulfil Danisco's general financial target of achieving a return that exceeds the cost of capital (WACC - weighted average cost of capital) in the third full financial year after acquisition at the latest. The applied cost of capital is approximately eight per cent after tax.

The acquisition is conditional upon required regulatory approvals.

Related topics: Markets