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Strauss bets on coffee after hummus recall

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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 profit

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 November

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.

By William Clarke

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