Israel’s Strauss Group and Italy’s Lavazza have hired advisers to submit rival bids for two French coffee brands which may come on the market early next year, several sources familiar with the matter said.
Strauss Coffee has a strong presence in Israel and Brazil, and is well established in Central and Eastern Europe. The company is interested in expanding its global presence but could be affected by an ongoing battle with its private equity backer TPG Capital, which is trying to reduce its 25% stake, some of the sources said. The Strauss Group, which is headquartered in Petah Tikva, includes the Strauss dairy brands and Elite coffee and chocolate. Italian, family-owned Lavazza, which was founded by Luigi Lavazza in 1895, is Italy’s top coffee company with 2013 revenue of 1.34 billion euros.
The L’Or and Grand Mere brands are expected to be put up for sale to ease a planned merger of Mondelez International’s coffee business with D.E Master Blenders 1753. Mondalez was created in 2012 when Kraft Foods’ global food and snack food business and its North American operations were split. Strauss and Lavazza are facing competition for the French coffee brands from four private equity funds, which are also looking to finalize their bids following preliminary talks with the sellers, the sources said. The brands could be valued at about 450 million to 500 million euros ($575 to 640 million) in a sale, the sources added.
Together L’Or, which makes coffee capsules that fit Nestle’s Nespresso machines, and Grand Mere, known for its smiling grandmother logo, have earnings before interest, tax, depreciation and amortization (EBITDA) of about 55 million euros, the sources said.
Representatives of Lavazza and Strauss declined to comment.
The global coffee business has undergone a spate of deals lately, fuelled in part by the rise of single-serve capsules and consumers’ growing taste for higher quality drinks.