Frutarom CEO: Wall Street offering could double our valuation to $100m

Frutarom (TASE:FRUT) plans to issue on Wall Street over the coning year to beef up its acquisitions strategy, its chief executive confirmed to TheMarker.

The Haifa-based company, which makes flavor and fragrance compounds for the food, pharmaceuticals, cleansers and cosmetics industries, could also see its valuation double to some $100 million, CEO Ori Yehudai told TheMarker.

Today Frutarom trades at a market cap of $46 million, 10.4 times profits.

The offering will be tied with an acquisition, or take place after an acquisition, in order to boost the company's valuation for the offering, Yehudai says.

"John Farber, the company's controlling shareholder, was not prepared to be diluted when offered to sell his holdings according to a company value of $70 million," Yehudai said. "It's hard to believe he'd agree to sell at a valuation of less than $100 million."

The company is in preliminary acquisition talks with a number of firms, but nothing concrete can be reported yet, Yehudai said.

The company's M&A strategy aims to achieve sales of $300 million a year in 2005. Its level today is $1202 million a year.

"Frutarom's strategic goal is to be one of the ten biggest flavors manufacturers in the world. Its rank today is 16th," Yehudai added.

Most of the company's deals today are with small manufacturers buying up to $200,000 or $300,000 at a time. That has helped Frutarom avoid direct competition with the giants, while sustaining high profitability.

"While we do operate in the United States and England, we focus mainly on smaller markets such as Russia and Turkey, where demand growth for our products is higher than average," Yehudai explains. The company has plans to set up a plant in Russia soon.

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