Food importer and kosher food supplier G Willi-Food International has signed a binding term sheet with the owners of a Russian dairy distributor to form a new joint company.
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Willi Food is to hold a 51% stake in the venture, which will take over all of the present activities of the distributor which has not been named.
In consideration for the 51% interest in the joint venture, which is being called NewCo, Willi Food said it will pay NewCo four times NewCo’s net profit after all applicable taxes and dividend distributions for the 2008 financial year. An advance payment in the form of a loan will be paid 15 days after the release of the distributor’s audited 2007 financial income statements, Willi Food said.
Willi Food stated that the closing of the transaction is subject to the completion of legal, financial and business due diligence and board approval. While it said its announcement was no guarantee that the transaction would close, it added that it expects the deal to be completed by early 2008
The company is described as a leading distributor of all cheese types in Russia and the number one supplier of hard cheeses such as Gouda and Edam. It sells approximately 36,000 tons of cheese products a year, generating revenues of US$120m.
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By GlobalDataThe venture will import and distribute European and local cheese products, and is also expected to import Willi Food subsidiary’s brands of kosher and healthy living dairy products.
The current owners of the distributor are to be appointed CEO and COO of NewCo respectively for a term of at least five years, while Willi Food will appoint the chairman and the chief financial officer.
“We are very excited about this transaction, which represents a bold step for Willi Food as we continue to expand our global footprint,” said Zwi Williger, Willi Food chief operating officer. “According to market data, over 650,000 tons of cheeses are consumed in Russia each year of which roughly 50% is imported.
“NewCo will provide a well-developed distribution platform for Willi Food and its subsidiaries to drive market demand for dairy products in all categories including premium branded products, kosher and healthy living styled dairy products, as well as other categories.”
