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Still waters / Strauss' buyout of Tami 4 - water technology meets marketing knowhow
By Yoram Gabison

Strauss' $90 million buyout of water treatment company Tene Industries, more commonly known as Tami 4, positions Strauss as a leader in the water purification market and strengthens the company's image as a promoter of health and quality of life.

Tami 4 develops and manufactures water filtration and purification systems. Its leading product is a hot-and-cold water dispenser for the home or office. The company has 350 clients, mostly in Israel. Tami 4 recently reentered the British market, with a pilot in a London suburb, after a three-year hiatus.
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The acquisition by Strauss will speed up its entry into the water purification market, and strengthen its position as a global company: Tami 4's technology has proved itself in Israel, but it has minimal presence worldwide.

This technology will help Strauss penetrate global markets with a profitable product perfectly suited to consumers' growing ecological awareness.

Strong sales in Britain, whose currency is stable, will be a boon for Strauss, whose bottom line has been adversely affected by the currency fluctuations in Brazil and Eastern Europe, where it sells coffee.

Britain is the European leader in green consumerism. Home water filtration systems are on the rise, edging out bottled water, which has a larger carbon footprint and is thus considered less environmentally friendly:

The manufacture and transport of polyethylene water bottles causes far greater greenhouse gas emissions than the installation of filtration systems and the occasional change of the filters.

In keeping with this trend, the Israeli company Mei Eden's mineral water sales in Britain declined in 2008.

Strauss is buying Tami 4 at a good price - the company is expected to chalk up NIS 300 million in sales in 2009, and have EBITDA profits of NIS 60 million.

In the past three years annual sales growth has been about 22%, significantly higher than Strauss 1.2% growth in the first quarter of 2009.

Strauss' purchase means a successful exit for FIMI Opportunity Funds and Psagot Ofek Investment House, which invested in Tami 4.

FIMI invested $11.5 million in two installments - the last of which was in May 2008, at a company valuation of $21 million for Tami 4.

FIMI is expected to receive about $37 million for its stake - meaning a return on investment of more than 200% - although the exact sum will depend on the company's third quarter performance.

This is an especially good move for FIMI because Tami 4's entry into the British market is considered risky.

Strauss will have to apply all its marketing and support experience and expertise to increase Tami 4's presence in both the Israeli and the European market, in order to maximize its untapped growth potential.
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