Strauss Says U.S. Fund Weighing Exit From Global Coffee Venture

TPG exploring 'exit alternatives' five years after buying a 25% stake.

Strauss Group said on Thursday that it was exploring various "exit alternatives" for TPG Capital in Strauss Coffee, their global joint venture, including the possibility that the private U.S. firm will sell its 25% stake.

"Strauss Group continues to regard Strauss Coffee as a major part of its activity, and will continue to support Strauss Coffee's development and growth," the Israeli company said in a statement. "No decisions have been made as yet regarding the TPG exit alternatives, as Strauss Group and TPG continue to explore together possible options."

Strauss, whose products run the gamut from coffee to prepared salads, gave no reason for TPG's possible exit from the venture except to say that considering divestments is a "regular practice of investment funds."

Shares of Strauss were down 0.2% in Tel Aviv Stock Exchange trading in mid-afternoon at NIS 55.75.

TPG, which is headquartered in Kansas City, Missouri, and was formerly known as Texas Pacific Group, acquired the stake in Strauss Coffee in 2008 at a company valuation of $1 billion. It also took a two-year option that has since expired to buy another 9.9% of shares for an additional $138 million.

Strauss Coffee, which accounts for about half the group's total sales, makes and markets branded coffee products, in Brazil under the Três Corações brand, Russia, Israel, Poland, Romania, Serbia and Ukraine. According to the market research group Euromonitor, Strauss Coffee was the fourth-largest company in the world retail coffee market excluding cafés, with a 3% market share.

Strauss Coffee's sales fell to NIS 989 million in the first quarter from NIS 1.048 billion a year earlier, mainly due to the depreciation of the Brazilian real. But earnings before interest, taxes, depreciation and amortization climbed 39% to NIS 131 million in the period. The company earned NIS 203 million in 2012 before deducting for management fees of NIS 26 million.

Strauss Group's 74.9% stake in its coffee subsidiary was valued on its 2012 end-of-year balance sheet at NIS 1.785 billion. 

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