Frutarom Industries Ltd. (TASE: FRUT; LSE:FRUT), which makes raw materials and flavors for the global food and beverages industry, is in the process of completing a takeover of Israeli company Enzymotec Ltd. (Nasdaq: ENZY), which deals in nutritional components and food additives. Frutarom hopes to gain control of Enzymotec at a company value of $260 million.
Frutarom, which has made a regular practice of acquiring companies, is led by president and CEO Ori Yehudai. The company today reported that it had purchased half of the 18.4% stake in Enzymotec held by billionaire John Paulson's hedge fund for a total of $24 million, reflecting a price of $11.50 per share. The purchase increased Frutarom's holding in Enzymotec to 19.1%, for which it paid a total of $42 million ($9.61 per share).
At the same time, Frutarom also announced that it planned to soon publish an offer to purchase for the rest of Enzymotec's shares at $11.50 per share. Frutarom's share price rose 2% today, and has risen by over 40% over the past year, pushing its market cap up to NIS 17 billion.
Frutarom signed an agreement with the hedge fund, under which the fund undertook to support Frutarom's offer to purchase, and to sell its remaining shares in Enzymotec to Frutarom, so that Frutarom will in any case reach a holding of at least 28.3% in Enzymotec, giving Frutarom control of the company.
Frutarom began its takeover of Enzymotec two months ago by purchasing 7.6% of the latter's share capital, and added 2.1% more a week later. Following Frutarom's purchases, Enzymotec's share price zoomed 60% in two months, pushing the latter's market cap up to $250 million. Enzymotec's share price closed at $11 yesterday, and went up to $11.50 after the closing of trading.
Managed by president and CEO Erez Israeli, Enzymotec develops, manufactures, and markets lipid-based bioactive raw materials for the nutritional additives, health, medical food, and infant milk substitute industries.
Frutarom is probably interested mainly in Enzymotec's line of independent products. The latter company's Vaya brand of food additives, backed by clinical research, is designed to reduce cholesterol, improve memory, and treat attention disorders. These products are marketed in the US and in Israel by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA)), and this business is growing. Enzymotec is based in Migdal HaEmek. It held its IPO in September 2013 at $14 a share, and the share price climbed to a peak of $34 in the ensuing months. The dramatic rise in the share price led the major shareholders at the time (Kibbutz Maanit, the Ofer Hi-Tech fund, and Millennium Material Technologies Fund) to make a $130 million offer for sale in February 2014.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 24, 2017
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