Strauss Group Ups Offer to Buy Back Stake in Strauss Coffee

Lawsuit filed by American investment firm TPG in Dutch court seeks investigation of alleged overcharging for services by Strauss Group.

The Strauss Group has offered to buy for 235 million euros private investment firm TPG’s 25.1% share in Strauss Coffee, according to documents filed by TPG in a lawsuit in a Dutch commercial court on Tuesday.

The American investment firm filed the lawsuit at the end of November asking the court to open an investigation into Strauss Coffee and issue an injunction preventing the firing of its CEO Todd Morgan. TPG alleged that the Strauss Group overcharged Strauss Coffee by 3 million euros for the provision of services that have decreased over time since the appointment of Gadi Lesin as Strauss Group’s CEO.

The American investment firm also claimed that the planned firing of Morgan was intended to derail a Strauss Coffee stock offering and force TPG to sell its shares in the company to Strauss Group at a lower price.

Strauss Coffee’s board of directors decided to fire Morgan on November 25 this year. The Dutch court will issue its ruling no later than December 31, four days before Strauss Coffee is to hold a shareholder’s meeting to vote on the board’s decision.

“We presented our written legal defense to the court in Amsterdam to the American investment firm TPG’s lawsuit,” the Strauss Group said in a statement. “Strauss refuted in court the fund’s baseless claims and will continue to promote the Strauss Coffee company’s activities, as it has done for dozens of years.”

TPG acquired its stake in Strauss Coffee for $293 million in September 2008. It rejected an offer by Strauss Group to buy its stake back for the same amount, claiming that its involvement in Strauss Coffee had led to a sharp increase in the company’s sales and profits. The Strauss Group claimed in court that the improvement in the Strauss Coffee’s financial results were due to the dropping price of green coffee beans and the performance of the company’s regional managers.

The original offer made by the Strauss Group in October for TPG’s stake was 215 million euros ($295.6 million at the current exchange rate), sources close to the negotiations said. In November, according to court documents the price was increased to 235 million euros ($323 million).

Bloomberg