THE WHAT? British chemicals company Croda has announced the acquisition of Spanish fragrance and flavors manufacturer Iberchem for €820m in a bid to expand further into the fragrant personal care and market.
THE DETAILS The purchase was done on a debt-free, cash-free basis and will be funded by Croda’s existing debt as well as the company raising £600 million through an equity placing representing 8 per cent of its issued share capital.
Croda shares rose 3 percent to $62.50 following news of the purchase.
THE WHY? The move indicates a change in direction for the company. With Iberchem described by Croda CEO Steve Foots as the ‘Zara of fragrance’ he lauded Iberchem for offering cost-effective, rapidly changing products.
Foots stated, “Our expansion into the fast-growing fragrances and flavours market further increases our exposure to consumer care markets, This is fast fashion in fragrances.”
However, some analysts expressed surprise to the FT.com about Croda’s swift turnaround from a life science focus.
Gunther Zechmann, a Bernstein analyst, said, “Flavours and fragrance is more a customer pull, Croda’s existing business is more a supplier push.”