Bolt-on acquisitions in the cradle of perfumery with positive signalling effect

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With the acquisition of two smaller competitors in Grasse, France, Symrise is strengthening its fine fragrance division. Despite small in size (combined revenues of only EUR 40m / c. 1% additional revenues) the two acquisitions in the cradle of perfumery should have an important signalling effect as both companies (SFA Romani and Groupe Neroli) have long-lasting family roots in one of the most prestigious area for fine fragrance in the world. On top, both companies look set to have high-end fine fragrance expertise, with access to own creative resources and natural raw materials as well as production facilities. However, relying on smaller bolt-on acquisitions might also reflect that larger targets such as majority family owned but stock listed peer such Robertet (RBT:FP) might not be up for sale. We reiterate our SELL recommendation based on concerns of overall increasing raw material price inflations. Our DCF backed PT of EUR 95.00 points to a downside risk of c. 10%.

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