In 2018, one of the largest acquisitions of a company traded on the Tel Aviv Stock Exchange took place, when US-based International Flavors & Fragrances (IFF) paid about $7 billion for Frutarom, an Israeli manufacturer of flavor and fragrance extracts.
Over the years, while managed by Ori Yehudai, Frutarom grew from a small spin-off company into an industry giant. An important part of its strategy was growth through acquisitions: Frutarom expanded via a global acquisition spree, earned it the soubriquet "the Pac-Man of the capital market" because of the many companies it devoured.
One of the acquisitions Frutarom made shortly before the IFF exit was of a small Israeli company named Turpaz Industries. In September 2017, Frutarom reported to the stock exchange that it had acquired control (51%) of Turpaz at a NIS 53.7 million valuation, so as to expand its activity in perfume essences.
When Frutarom was sold to IFF, Turpaz’s previous owners, led by Keren Cohen Khazon, decided to buy it back at a similar price. Seven years have passed since then, and Turpaz (TASE: TRPZ) is now traded at a market cap of no less than NIS 4.6 billion. In many ways, it is now replicating Frutarom’s Pac-Man strategy: acquiring more and more companies abroad, expanding and doubling its sales every few years, growing, and seeing its stock price climb.
At present, an exit is not on the table, and CEO Cohen Khazon (who holds 44% of Turpaz’s shares), says that although an acquisition is always a possibility, "We have no intention of selling the company in the coming years. We want it to become one of the top ten companies in the industry. We didn't come to make a quick buck and leave. We said we would double sales every four years, and up until now, it’s taken less than four years. We're like in the movie Mivtza Savta ("Operation Grandma") - 'You start at your fastest, and increase speed.'"
Beyond that, "I love Turpaz," she declares. "It's in my bones. We’re building an industry headquartered in Israel, but global. That’s important for the State of Israel because industry is a national treasure. I have no other country, even if I’m out of the country 200 days a year. And if we don’t build industry, we won’t be here."
Up 270% since going public
Turpaz began its journey in 2011 when Cohen Khazon and her partners - attorney Israel "Reli" Leshem, Alon Granot (formerly CFO of Frutarom), and Ilan Levita (formerly CEO of Makhteshim Agan) - acquired control of a small Holon-based flavor and fragrance extracts company for about NIS 11 million.
In the following years, the company grew through acquisitions, and there was also the brief episode in which it was sold to Frutarom and then repurchased. It went public on the Tel Aviv Stock Exchange in May 2021, one of the most successful IPOs in a year of disappointments for investors, delivering a cumulative return of 270%.
After the IPO, acquisitions continued at an even faster pace. Since the beginning of this year alone, and despite the war, three acquisitions - in Belgium, Poland, and France - have been completed for a total of over $64 million. Altogether, Turpaz has acquired over 20 companies since its inception.
The company operates in three areas: flavor, fragrance, and unique raw materials. At the end of 2024, it had 22 production sites and employed over 1,000 people worldwide, about one-third of them in Israel. In the first quarter of this year, the company’s revenue was $60.4 million, representing a 54.7% increase year-over-year, with organic growth at 9.1%. Net profit rose by 43% to $4.4 million, and adjusted EBITDA grew by 63% to $13.6 million.
Acquisition-related expenses increased Turpaz’s leverage. It had net debt of $88 million by the end of the first quarter. The most recent acquisition was 68.6% of French company Attractive Scent for $32.3 million, funded through short-term bank financing, to be replaced later with a long-term loan. This week, Turpaz reported it had secured a €28 million loan from a banking group to finance the acquisition.
The acquired company is in fragrances, providing extracts for the luxury perfume industry as well as for cosmetics and candles. In general, Turpaz’s acquisitions span its three activity areas. "The company is built on the golden triangle," says Cohen Khazon,"flavors, fragrances, and unique raw materials," as are all major companies in the sector. This structure, she says, allows Turpaz to benefit from internal synergy.
800 targets in the crosshairs
According to Cohen Khazon, there are around 800 companies in the market that could be acquisition targets. At any one time, Turpaz is in negotiations at different stages with a varying number of companies-sometimes in the single digits, sometimes even double. Worldwide, there are many small, family-owned enterprises that tend to be sold when their founders wish to retire.
Are current market valuations favorable for acquisitions? Cohen Khazon says it’s very individual: some markets are more expensive, like North America and France, others less so. Multiples are higher in the fragrance industry than in the flavor industry, which has more players.
So far, the market seems happy with Turpaz’s growth strategy, and the stock has jumped about 140% since the beginning of the year - well above the Tel Aviv 125 Index, of which it is part. Investment house Leader Capital Markets recently raised its target price for the stock to NIS 60, representing a 30% premium over the current price.
Leader Capital Markets analyst Dina Korshunov explains that the recommendation is based on attributes of both the company and the market. "Turpaz has demonstrated a very impressive track record in recent years, with more than twenty successful acquisitions. It grew more than 50% in revenue and over 60% in EBITDA (in the first quarter year-over-year - S.H.W.)" she says. "That means that profit growth exceeds revenue growth, so you see the fruits of the strategy. It's not enough to find and acquire a company; you also have to integrate it properly, and leverage its capabilities. At Turpaz, the results speak for themselves."
Korshunov believes Turpaz has a high-quality, experienced management team with expertise in the market and in acquisitions, and it knows how to pick good target companies. About the market, she says its characteristics support this strategy: "We saw the same thing with Frutarom," she notes. "The market is made up of very large players like IFF, and many small and mid-sized companies. Often, these are very experienced family firms, but without a next generation, so there are many acquisition opportunities given the market characteristics. This allows Turpaz to expand its activity and geographical reach, and increase synergy within the group."
Despite the many acquisitions, Korshunov says Turpaz’s balance sheet remains strong and not overly leveraged. "If Turpaz were acquiring endlessly without growing profits, the leverage would be dangerous. But its acquisitions are responsible, at relatively low multiples, and it continues to improve results while maintaining a healthy balance sheet."
More opportunities than risks
Asked about the risks of investing in the company, Korshunov notes that risks always exist, but in her view, Turpaz sits more on the opportunity side. "In a time of macroeconomic and geopolitical uncertainty, the flavor and fragrance market, which is connected to the food sector, is defensive, and Turpaz has global operations with wide geographic diversification.
"Of course, there’s always a risk that a specific acquisition won’t succeed, but the acquisitions are mid-sized to small, so the company can absorb it."
She says the market is positive, growing at a mid-single-digit rate, and driven by consumer trends. "Turpaz isn’t just growing with the market, it’s also capturing market share. This is a special stock in today’s market, and I don’t think there are many like it," she sums up.
Cohen Khazon, for her part, answers the question about aspirations for the stock by saying. "I don’t manage the stock, I manage the company. And I can say that we’re building an excellent company. We’ve defined a growth strategy, both acquisition-based and organic, and we’re implementing it. When people see that we don’t just talk but deliver results, they believe in us."
"Owners are allowed to cash out"
Dr. Israel "Reli" Leshem, a Turpaz director and one of Cohen Khazon’s long-time partners, recently capitalized on the stock’s positive momentum and sold shares in several tranches, the latest being this week. Since May, Leshem has sold over NIS 40 million in Turpaz shares and still holds shares valued at NIS 220 million.
Leshem is part of a broader trend of insiders who have been selling lately, raising the question of whether controlling shareholders are seeing a peak and anticipate a trend reversal.
Cohen Khazon, who currently holds Turpaz shares worth more than NIS 2 billion, has not joined Leshem in selling off, but she says: "Even if I decided to sell part of my stake, it wouldn’t be a big deal. I put NIS 50 million of my own money into buying back Turpaz, so if I sell now and recover NIS 50 million, I’ll still retain control.
"Right now, I don’t have an immediate need to cash out, but in the end, controlling shareholders are allowed to sell and enjoy their money. After all, I work 20 hours a day, six days a week. Controlling shareholders work hard and enhance the value of companies for all shareholders, and they’re allowed to enjoy themselves as well."
Will Turpaz, like Frutarom, also become an acquisition target? Korshunov says, "Anything’s possible, but the company’s main objective is to grow. I think as Turpaz grows, it may become seen as an attractive target, either within its industry or to other types of investors.
"Frutarom is an interesting illustration of market behavior," she notes. "Mid-sized companies acquire small ones, and eventually the big players acquire the mid-sized ones. When large companies buy, they sometimes sell off divisions or sections of the acquired companies, and that’s part of the market cycle."
Published by Globes, Israel business news - en.globes.co.il - on July 15, 2025.
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