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Symrise to acquire Diana Group for US$1.8 billion

German scents and flavours group Symrise is to buy France's Diana Group for an agreed 1.3 billion euros ($1.8 billion) including debt to narrow the gap on top rival Givaudan and expand in natural ingredients and pet food,, according to Reuters.

The purchase from private equity group Ardian will make Symrise the world's third-biggest scents and flavours company, up from number four, and help it toward a goal of boosting annual sales by around 1 billion euros by 2020.

Symrise Chief Executive Heinz-Juergen Bertram told reporters on Monday the firm would likely finance the deal via a 10% capital increase, as well as a mix of debt and equity.

Based on Symrise's current share price, a sale of 10% of its stock would generate around 400 million euros. The acquisition should start adding to earnings per share from 2015 onward, Symrise said.

"We think that the acquisition, although not cheap, makes strategic sense for the company," Berenberg Bank analyst Evgenia Molotova said in a note to clients, saying Diana had a very strong market position in natural ingredients as well as in the lucrative pet food market.

The deal values Diana at 14 times its 2013 earnings before interest, tax, depreciation and amortization (EBITDA).

CEO Bertram ruled out more big acquisitions in the medium term, but added Symrise would be open to smaller bolt-on deals.

Symrise had 1.83 billion euros in revenue last year, and combined with Diana, the new group will have pro-forma sales of 2.26 billion euros. Givaudan had sales of 4.37 billion Swiss francs ($4.99 billion).

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