The controlling shareholders in Willi Food, Yossi and Zwi Williger, are eying café chain Aroma Israel. Sources inform "Globes" that the brothers have offered to buy a 35% stake from the partners in the chain, Yaron Yarkoni and others. G. Willi-Food International (Nasdaq: WILCF; TASE: WLFD)
The Williger brothers offered to buy the shares at a valuation of NIS 250 million, an amount that reflects a multiple of 10 on the annual net profit of the company.
Willi Food subsidiary G. Willi-Food International (Nasdaq: WILCF; TASE: WLFD) recently raised $20 million in a secondary offering on Nasdaq, and the Williger brothers seek to use the funds raised to invest in the coffee business.
The Aroma Israel chain was founded in 1994 by Yariv Shefa, who holds 36% of the shares. Other shares in the chain are held by a large number of partners, some of them members of Shefa's family, such as his mother Barbara and brother Doron. Some partners, including Yaron Yarkoni, who holds his shares through Aroma Yarkoni Holdings, purchased the shares from Shefa's ex-wife's, who received 40% of the shares.
Aroma Israel is considered the leading café chain in Israel. It has 103 branches throughout the country, not including Tel Aviv, where the Aroma Tel Aviv chain operates. Most branches operate as franchises.
The current offer reveals the financial results of the privately held chain for the first time. Up to now, it has refused to disclose them. According to the figures, the annual sales turnover of the chain is about NIS 530 million (including sales by franchisees) and annual net profit (shareholders only) is about NIS 25 million a year.
The chain has a small staff of about 100 at its production plants and about 20 in administration. All other branch employees are employees of the franchisees.
Sources at Willifood made it clear to "Globes" that the company sees itself not as a financial investor but as a strategic investor. Willifood wants to come into Aroma Israel as a partner and to expand the chain rapidly in the US. Willifood's idea is to establish Aroma branches within US supermarket chains, along the lines of the Starbucks model.
This is precisely one of the reasons that Shefa opposes the sale of shares to Willifood, and his opposition is holding up the sale.
Willi Food has a strong preference for Aroma Israel, but if the deal falls through, it intends to examine investment in other café chains.
Willi Food declined to comment. It was not possible to obtain the responses of Yariv Shefa and Yaron Yarkoni.
Published by Globes [online], Israel business news - www.globes-online.com - on March 21, 2010
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