‘Full service’ beauty: Croda to expand into fragrances with €820m Iberchem acquisition

By Kacey Culliney contact

- Last updated on GMT

The acquisition takes Croda International into the fast-growing global fragrance category for the first time - a move it believes will benefit beauty manufacturers (Getty Images)
The acquisition takes Croda International into the fast-growing global fragrance category for the first time - a move it believes will benefit beauty manufacturers (Getty Images)

Related tags: Croda international, acquisition, Fragrance, M&A, Personal care, Beauty, scents

Specialty chemicals major Croda International is set to acquire Spanish fragrance and flavour firm Iberchem in a multi-million-euro deal that creates a full-service offering for beauty and personal care manufacturers.

The deal is expected to close by the end of 2020.

Iberchem to remain ‘independent entity’

The move would see Croda acquire Iberchem’s 14 global manufacturing facilities and 10 R&D centres, along with its commercial reach across 120 countries – 80% of which served the personal care and home care markets via its fragrance division. Food, pharmaceutical and oral care applications under Iberchem’s Scentium flavours division made up the remaining 20% of business.

Under the deal, Iberchem would continue to operate as an “independent entity”​ but receive “extensive support”​ from Croda. From next year, Iberchem would operate under a new Croda business unit, consumer care, alongside existing personal care and home care operations.

Ramón Fernández, CEO of Iberchem, said: “The preservation of the Iberchem identify, the reason why our customers place their trust in us on a daily basis, was of paramount importance for the management team, and we are pleased how understanding Croda has been on this aspect. We are delighted to embark on this exciting new adventure.”

Tapping into ‘high growth’ global fragrance potential

Croda said the acquisition would help drive its strategic objectives by focusing on faster growing core consumer markets and adding a “new, high-growth adjacency”​ to Croda’s existing personal care and home care businesses – fragrances.

Acquiring Iberchem took Croda into a global fragrance market that was growing at a CAGR of 5.6% and primed to reach €49.5bn ($58.8bn) by 2024, according to Euromonitor International. Importantly, Iberchem’s current global reach was particularly strong in emerging markets like Africa, the Middle East, Latin America and Asia-Pacific that were central to rising demands for beauty, health and hygiene products, Croda said. Emerging markets made up 83% of Iberchem’s total sales.

“Iberchem stands out with its significant exposure to emerging markets, extensive product portfolio well placed to adapt to sustainability trends, strong customer focus and R&D capability, and 10-year track record of consistent year-on-year growth,”​ said Steve Foots, CEO of Croda International.

“By bringing our businesses together, we are creating a new, full service offering to our customers in consumer care markets and a compelling platform from which to grow the combined business in the years ahead,”​ Foots said.

A ‘full service’ beauty future for product development

Croda said this “full service”​ offering would likely be attractive to regional, own-brand and independent manufacturers seeking a ‘one stop shop’ for product development needs.

Iberchem agreed: “Many customers require both ingredients and fragrances and can expect to benefit from collaborative thinking and full formulation development made possible by this acquisition.”

For Croda, this cross-selling potential and other synergies created under the deal was set to generate €48m in revenues within five years.

Related topics: Business & Financial, Financial focus

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