Flavour giant Givaudan acquires Quest
Swiss firm's ambitions in the global flavour industry.
The Geneva-based company announced today that it has signed an agreement with Quest's UK-based parent company Imperial Chemical Industries (ICI) to acquire the fragrance and flavour business.
"Integrating Quests unique set of talent, creativity, products and technology will result in a unique platform to serve customers and create a potential for accelerated growth," said Givaudan in a statement.
The transaction is still subject to regulatory approval, but it is hoped that completion will take place during the 1st Quarter 2007.
"Quest has regained momentum over the last three years thanks to the talent and commitment of its people," said Givaudan chief executive Gilles Andrier.
"Thus, we are very excited to have this unique opportunity of creating an unrivalled industry leader, building on the strength, momentum and common values of both companies."
Indeed, the acquisition is in line with Givaudan's strategy of focusing on developing markets and capturing opportunities in key segments. The company has worked hard to streamline its operations, and in 2005 successfully completed the transfer of the liquid and dry flavour production from Barneveld (Netherlands) to Dortmund (Germany) and Zurich (Switzerland).
In addition, the final phase of the Savoury Development Centre in Kemptthal (Switzerland) was recently completed with the inauguration of a fully dedicated pilot plant, capable of handling a wide range of food manufacturing processes.
The acquisition is designed to build on this focus, and also strengthen growth in important growth markets such as Asia Pacific, Latin America and Eastern Europe. Givaudan reported double-digit growth last month in developing markets such as China, India, Argentina and Columbia.
And the acquisition should also have positive implications for Givaudan's technology portfolio. The company said that the transaction would enable the company to significantly increase its research and development investments.
In 2005 Quest had sales of £560 million and a trading profit of £52 million. Quest is headquartered in Naarden, The Netherlands, and employs around 3,400 globally with major activities in the US, UK, Asia and Continental Europe.
"This is an outstanding opportunity for Quest, joining the highly creative, most respected and profitable business in our industry and the clear market leader," said Quest chief executive Charles Knott.
For its part, Givaudan said that it expects to achieve annual synergies of CHF 150 million with full benefits to be realised after year three. The acquisition will be financed by debt and the issuance of up to CHF 1 billion in equity.
"Givaudan has traditionally been a driver of industry consolidation by taking advantage of value enhancing acquisition opportunities while still focusing on profitable organic growth," said Givaudan chairman Jurg Witmer.
Today's announcement follows the publication of last month's solid financial results. The company reported sales of CHF 2,200.5 million from January to September 2006, resulting in a growth of 3.3 per cent in local currencies and 5.5 per cent in Swiss francs.
The flavour division recorded nine months sales of CHF 1,281.9 million, which represents an increase of 1.6 per cent in local currencies and 3.8 per cent in Swiss francs.
