Strauss Group is upping its stake in the coffee sector, as
it reports rising sales and hails a "growing and resilient" consumer market.
The Israeli company, which produces snacks, fresh foods and
coffee, will buy back a 25.1% stake in its coffee arm from TPG Capital
Management, for E257m, or about $279m at current exchange rates.
Strauss has already paid E172 at the signing of the deal,
with a remainder of E85m to be paid by August this year.
"The acquisition and the redemption of shares and stock
options will be financed by the company's own assets and debt of Strauss Coffee
and by Strauss Group debt or share capital increase as per market conditions,"
the company said.
TPG bought its stake in 2008 for $293m.
Confidence in coffee
Gadi Lesin, Strauss president and chief executive said "coffee
is a core business for Strauss Group, and the transaction reflects our belief
in the coffee category".
Mr Lesin said the global coffee market was "attractive,
growing and resilient".
The group's coffee sales grew 21 % to 1.06bn shekels over
the three months of December 31.
The growth was attributed to "increased volumes and selling
prices in most geographies".
Strauss is a major player in the Brazilian and Eastern
European coffee market.
Hummus recall hits
Across the company, Strauss reported a 22% drop adjusted net
profits over the three months to December 31, to 58m shekels.
The drop in profit was down in part to a large-scale product
recall in the United States.
Sales at the group's international dips and spreads segment,
a joint venture with Pepsico, were down 27% following a recall of hummus
products in the United States, over concerns of listeria contamination back in
At the time the company said the recall would hit operating
profits by some $5m.
Strauss reported revenue up 7.2% year-on-year to 2.03bn shekels.