Israel’s Strauss Group has regained full ownership of Strauss Coffee, after agreeing to buy out the 25.1% stake held by US-based TPG Capital.
The €257 million deal will put Strauss Coffee under Strauss Group’s ownership for the first time since TPG Capital took a stake in the business in 2008.
The value of the buyout represents a significant premium on the $293 million that TPG paid at the time: despite being worth almost €270 million today, it amounted to less than €200 million during the depth of the euro’s value against the dollar.
Strauss Group president and CEO Gadi Lesin said: “This is an important day of celebration for Strauss Group and Strauss Coffee. The acquisition of the outstanding shares in our coffee company is yet another confirmation of our long-term strategy and of the growing dominance of Strauss Coffee’s global status and its impact on Strauss Group, in realisation of our commitment to be active in areas that improve people’s lives all over the world.
“Coffee is a core business for Strauss Group, and the transaction reflects our belief in the coffee category, in the global coffee market as attractive, growing and resilient and, of course, in the coffee company and its employees.”
Lesin said that the buyout would ‘create strategic and operational value for the company’. He reaffirmed the group’s belief in Strauss Coffee’s ability to continue its growth and add value for shareholders.
“On behalf of Strauss Group, I would like to thank TPG for their partnership during the past eight years and for their contribution to Strauss Coffee,” Lesin added.
Strauss Coffee CEO Tomer Harpaz added: “The world of coffee represents a fascinating opportunity for us. The global coffee culture is spreading exponentially, and we expect to see more coffee consumers and more high-quality coffee becoming accessible. The deep connection between people and their cup of coffee makes the category more resilient, expressed by stable demand even in times of an economic down cycle, an important stabilising factor in a volatile world.
“Strauss Coffee is well-positioned to address these trends and is committed to promoting the coffee culture among its consumers around the world, fuelled by our genuine passion for coffee and coffee products. I am certain that the transaction will support the company’s ability to realise its strategy, to strengthen its position as a leading international coffee company, and to fully exploit the significant opportunities we see in the global category.”
On top of the announcement that it would buy TPG Capital out of Strauss Capital, the group has reported full-year sales for 2016 of ILS 7.9 billion ($2.18 billion) – up from ILS 7.6 billion the year before.
The 3.9% growth was driven by ‘significant achievements at Strauss Israel, together with continued improvement in Strauss Water’, the company said.
Gross profit was up 5.4% to ILS 2.98 billion ($820 million), while operating profit was 12.8% higher at ILS 744 million ($205 million).
But its fourth-quarter profit was down by more than 20% on the back of a recall of its Sabra spreads in the US.
Lesin continued: “2016 was a strong year for the group and its businesses, which have posted an improvement across all metrics and strong cash flows. Strauss Israel continued to exceed market growth rates in our home base in Israel and Strauss Coffee posted as set of excellent results for 2016.”
They included 7% sales growth on 2015 and a 34% improvement in its pre-tax earnings – up to ILS 359 million ($99.3 million).
“We will continue to invest in innovation, in efficiency enhancement and in delivering genuine added value to our consumers around the world,” Lesin said.
© FoodBev Media Ltd 2021
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