therefore have to rely on more tangible benchmarks
to understanding the impact of ingredients in F&F,
drawing upon senior executives vision statements,
group strategic objectives and, of course, the tangible
undertaking of M&A and other forms of strategic
alliances. The benefits of this approach also allows
us to better understand the strategic rationale behind
these moves, which are more often driven by end-customer and ultimately consumer demands.
Who is Making the Critical Invisible
Between 2010-15, there was a steady rise in the
number of ingredients transactions annually, which
fell back to around 40-50 deals p.a. As F- 1 highlights, F&F sponsored transactions have accounted
for around 40-50% of all ingredients deal activity
annually. Interestingly, since 2011, at least half of
the F&F deals undertaken have a strong element of
F&F ingredient activity. In part, this is due to the
lower level of tradable end-user assets available to
the market over the period, and the strategic trend
towards F&F ingredients acquisitions is clear.
Analyzing ingredients valuations by most metrics
and over almost any period of time, it is clear that
situations involving F&F generally tend to be valued
at a price premia above that achieved by their
general ingredients peers (excluding particularly
specialized value-add ingredients situations). Over
the past five years, this distinction has become more
prevalent with the leading F&F companies’ share
prices and their associated financial EV/EBITDA
metrics rising twice as much as ingredients peers.
The direction is also true for private transactions.
Even though prices paid for ingredients situations
have increased, it remains generally common for
the ingredients transaction to be executed at a
multiple less than its (listed) F&F acquirer – except
perhaps for those transactions in the active ingre-
dients/cosmetics space where scarcity value and
future growth opportunity has resulted in a com-
petitive price paid.
As F- 3 displays, the Leffingwell leaders have been
major deal protagonists, particularly for F&F ingredients, for over the past decade.
Of the top four F&F producers, Symrise is a
leading protagonist of ingredients diversification
and the most successful in expanding portfolio mix,
rightly claiming its status “Diversifying Success.
Successfully Diversifying.” It also forms the most
transparent illustration of the role of ingredients
within a leading F&F house. Whilst some commentators may focus on their more recent, higher-profile
moves, such as the 2014 Enterprise Value (EV)
ca.e1.3 billion purchase of Diana Group, which
Largest F&F transactions, by enterprise value (selected)