Frutarom Acquires the Business of the American Flavors Company Flavor Specialties

- Continues to Implement Rapid Growth Strategy

- Ori Yehudai, President of Frutarom: "This acquisition Reinforces
Frutarom's Presence in the US in the Flavors Field and Strengthensits
Position as a Leading Global Flavors Producer and Supplier."

Frutarom Industries Ltd. (LSE: FRUT, TASE: FRUT, OTC:FTUTF, FRUTF.PK)
announced today that it has signed an agreement to acquire the assets and
business of the American Company Flavors Specialties Inc. ("FSI") which has
activities also in Central and South America, in consideration for a cash
payment of $17.2 million. The acquisition agreement determines a future
upwards or downwards earn-out mechanism, based on the average EBITDA
generated by FSI during the 24 months ending December 31, 2010, multiplied by
5.5. In accordance with the earn-out mechanism, total consideration could
increase up to a maximum of $27 million or decrease to $ 3.15 million. The
upwards earn-out payment will be paid (by Frutarom) for average EBITDA in
excess $3.1 million and the downwards EBITDA will be paid (to Frutarom) for
averaged EBITDA below $2.7 million. In 2008, FSI's sales totaled
approximately $11.5 million. In 2007, FSI's sales totaled approximately $11.2
million. The acquisition will be financed through bank loans.

Established in 1979 by 3 experienced and reputable founders,
FSI is a flavor and botanical extracts company that develops, produces and
markets flavors and botanical extracts mainly for the food and beverage
industry. FSI has a production site in Corona, California, in the Western
Coast of the US and it employs some 38 employees. FSI's broad customer base
includes leading food and beverage manufacturers in its countries of
operation.

According to Ori Yehudai, President and Chief Executive
Officer of Frutarom, "This acquisition, which is an additional step in the
implementation of Frutarom's rapid growth strategy and of realizing its
vision, 'To be the preferred partner for tasty and healthy success', is an
important strategic acquisition that implements our plan to strengthen
Frutarom's geographical presence in the flavors field in the American
Continent, and mainly in the US, and supports the further strengthening and
positioning of Frutarom, which is already today one of the ten largest
companies in the world in the flavors field." Yehudai added, "Thanks to
Frutarom's proven experience in making acquisitions and in realizing the
synergy and cross selling opportunities, we are convinced that this
acquisition will contribute to Frutarom's continued fast growth and
profitability and will create high value for our customers, our employees and
our investors."

Frutarom's personnel, particularly in the US and in the
flavors field, will benefit from the significant addition of experienced and
skilled managers and employees at all levels. FSI's 3 founders and its strong
and experienced management will be integrated into Frutarom USA and
contribute their rich experience, and together they will lead the flavors
activities in America.

The acquisition is expected to strengthen Frutarom's research
and development capabilities in the fields of flavors, functional food and
combining health-benefit products into food and beverages. FSI specializes in
this important field, which, according to market researches, is growing in
the Western World at an annual rate of approximately 9%.

Yehudai added, "Frutarom intends to take advantage of our
global marketing and sales infrastructure to leverage and realize the many
cross selling opportunities created by this acquisition, by broadening both
the customer base and the product portfolio."

According to Yehudai, Frutarom continues to implement its
rapid growth strategy combining organic growth in its core activities, at
rates above the industry average, with strategic acquisitions. Frutarom
continues working to identify and implement additional strategic acquisitions
of companies and activities and believes that its solid capital structure and
its ability to generate cash from operating activities, together with
available credit lines from leading banks in the world, will enable it to
utilize acquisition opportunities created due to the global economic crisis.

Background on the Company

Frutarom is a multinational company which acts in the global
markets of flavors and fine ingredients. The Company has significant
production and development centers on three continents and it markets its
products in five continents to over 10,000 customers in more than 120
countries. Frutarom's products are intended for the following industries -
food and beverages, flavor and fragrance, pharmaceuticals, nutraceuticals,
health food and functional food, food additives and cosmetics.

Frutarom operates under two Divisions:

- The Flavors Division, which develops, produces and markets
flavor compounds and food systems.

- The Fine Ingredients Division, which develops, produces and
markets natural flavor extracts, natural functional food ingredients, natural
pharmaceutical/nutraceutical extracts, specialty essential oils and citrus
products, and aroma chemicals.

Frutarom's products are produced in its plants in the United
States, England, Switzerland, Germany, Israel, Denmark, China, and Turkey.
The Company's global marketing organization includes the marketing divisions
in Israel, the United States, England, Switzerland, Germany, Belgium,
Holland, Denmark, France, Hungary, Romania, Russia, Ukraine, Kazakhstan,
Belarus, Turkey, Brazil, Mexico, China, Japan, Hong Kong, India and
Indonesia. The Company also works through local agents and distributors
worldwide. Frutarom has about 1,500 employees worldwide.

For further information, visit our website:
http://www.frutarom.com.

Company Contact

    Ori Yehudai, President & CEO
    Frutarom Ltd.
    Tel: +97299603800
    Email: oyehudai@frutarom.com

Company Contact: Ori Yehudai, President & CEO, Frutarom Ltd., Tel:
+97299603800, Email: oyehudai@frutarom.com

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