UBS ups Givaudan target share price on Quest

13 December 2006 09:12  [Source: ICIS news]

LONDON (ICIS news)--UBS on Wednesday raised its target share price for flavours and fragrances firm Givaudan by 200 Swiss francs (Swfr) to Swfr1,400 on the back of the Quest acquisition.

The bank's analysts said in a note to clients that by leveraging the high quality Quest assets under the Givaudan brand, the company should expand margins back to a 25% pre-acquisition earnings before interest, tax, depreciation and amortisation (EBITDA) level.

This should be supported by closing up to half of Quest’s 20 plants and reducing headcount by 1,000 of the new 8,300 employees, the analysts added.

“The new entity will head the market in both divisions, all major regions and with a global 23% share – at a large lead to the number two’s 13%,” UBS said.

“We believe going forward the leading four flavours and fragrances companies, and particularly Givaudan, will win market share from the smaller suppliers who cannot keep up with the pace in R&D [research and development], consumer surveying and other global services.”

Imperial Chemical Industries (ICI) said on 22 November that it had agreed to sell Quest, its flavours and fragrance unit, to Switzerland-based Givaudan for £1.2bn ($2.36bn/€1.78bn) in cash.

The bank left its rating for Givaudan unchanged at Buy 2. The company's shares traded at Swfr1,128 at 08:42 GMT, up 2.55% from the previous close.

($1 = £0.51)

By: Hilde Ovrebekk
+44 20 8652 3214

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