Strauss Group Ltd. (TASE:STEL) is negotiating with Pepsico Inc. (NYSE:PEP) and its Frito-Lay unit to collaborate in North America, on the primary business lines of Sabra Salads Food Industries Ltd.
Strauss owns 51% of Sabra Salads, and its president, Yehuda Pearl, owns the rest through Blue & White Food Products Corporation. Strauss rose 1% in morning trading, bucking the market trend.
Strauss acquired control of Sabra Salads parent company Blue & White Food Products in August 2005 for $8.7 million, and has a four-year option to buy the rest of the company. If an agreement is reached with PepsiCo, Strauss will exercise this option, and then sell 50% of Blue & White to Pepsico.
Last year, Strauss doubled Sabra Salads' market share, and it is now the second largest maker of Mediterranean dips and spreads in the US. The company had NIS 170 million in sales in 2006, and a 20% share of the market, in terms of value.
A partnership with PepsiCo would be strategically important for Sabra Salads. PepsiCo has a market cap of $110 billion, and is a major US food company. It could boost Sabra Salads’ sales multifold within a short time, making it the market leader in its segment.
Published by Globes [online], Israel business news - www.globes.co.il - on September 11, 2007
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