Strauss Group Ltd. (TASE:STRS) and its partner in Strauss Coffee, TPG Capital LP, are in preliminary talks to float the venture. The two companies, which are in a legal dispute, have met with underwriters and financial advisers on the issue.
The two companies have been partners since TPG acquired 25.1% of Strauss Coffeee for $293 million (giving a company value of $1.16 billion for the unit) in 2008. As a private equity fund, TPG asked to sell the holding a few years later, and approached Strauss a few months ago about a possible IPO for Strauss Coffee. TPG claims that Strauss frustrated the proposal, but the Dutch Enterprise Chamber dismissed the case.
An IPO of Strauss Coffee is one exit option for TPG. No date has been set for an IPO, if one is held at all, nor has a stock market been chosen, either Wall Street or Europe. TPG and Strauss apparently disagree on Strauss Coffee's value, with TPG citing a value that Strauss believes is not achievable.
Strauss said in response, "Without going into details, Strauss has said in the past that it was examining an agreed exit with TPG, the minority shareholder in Strauss Coffee. As stated in the past, an IPO is one of the possibilities. The review is ongoing and no decision has been made."
On the basis of the market caps of foreign food companies, which have operating profit multiples of 16-17, Leumi Capital Partners estimates the value of Strauss Coffee at NIS 5.6-7.2 billion, or $1.6-2.05 billion. This would give TPG's stake a value of NIS 1.4-1.8 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on January 19, 2014
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