Glanbia plans to acquire US-based Flavor Producers in a US$300M deal

17 Apr 2024 --- Irish global nutrition group Glanbia has agreed to purchase the leading independent US flavor platform, Flavor Producers, for an initial consideration of US$300 million and a deferred consideration of up to US$55 million, dependent on 2024 performance.

“I am delighted to announce the acquisition of Flavor Producers, which represents an important step in the continued growth of our Nutritional Solutions (NS) business,” comments Hugh McGuire, Glanbia’s CEO. 

The transaction brings about a significant expansion of the flavoring offerings of Glanbia’s NS business. It particularly expands the business' natural and organic flavor capabilities, which is in line with the current consumer trends.

“This acquisition builds on our existing flavors capability and positions us well to capture long-term growth opportunities in the organic and natural flavors 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.”

Translation highlights 
Glanbia emphasizes the value of acquiring Flavor Producers, an established platform with over 40 years of experience in the flavors business, an expert team and a track record of innovation. 

The transaction brings about a significant expansion of the flavoring offerings of Glanbia’s Nutritional Solutions business.The purchasing company celebrates Flavor Producers’ know-how in R&D, proprietary ingredients and formulation capabilities. The platform brings an extensive flavor library and vertical integration into flavor extracts to the table, which helps facilitate clean label solutions. 

Flavor Producers offers a financially attractive margin and growth profile touted to bring about a business mix to the NS business, as well as being consistent with Glanbia’s balanced capital allocation framework, aiming to retain a strong financial position following the transaction. 

Glanbia underscored that the final payment consideration will be impacted by the value of the actual working capital and customary completion accounts at closing.

The acquisition financing is sourced from Glanbia’s current banking facilities and cash. The company describes its balance sheet as “strong,” having a net debt of US$248.7 million at the end of FY 2023, a net debt to adjusted EBITDA ratio of 0.5 and US$1.3 billion of committed debt facilities.

The upcoming transaction is scheduled to close in the first half of 2024, depending on customary closing conditions and agreed accounts. Glanbia anticipates it to be marginally accretive to its adjusted earnings per share in its first full year of ownership.

By Milana Nikolova