G. Willi-Food International Signs Binding Term Sheet to Purchase Majority Interest in Russian Dairy Distributor

23/10/07 G. Willi-Food International Ltd., one of Israel's largest food importers and a single-source supplier of one of the world's most extensive range of quality kosher food products, announced that it had signed a binding term sheet with the owners of the Russian dairy distributor, who is a leading supplier and importer of dairy products in Russia, to form a new joint company. Willi Food would hold a 51% interest in NewCo and the owners of the Distributor would hold the remaining interest. Under the terms of the binding term sheet, all of the present activities of the Distributor are to be executed under the new entity. The closing of the transaction is subject to completion of legal, financial and business due diligence and final Willi Food board approval and is scheduled to be concluded by early 2008. There is no guarantee that the transaction will close.

It is currently estimated by the owners of the Distributor that the Distributor for 2007, will sell roughly 36,000 tons of cheese products to a base of over 1,000 customers in Russia and generate an estimated $120 million in sales. According to HLB Prime Advice, a Russian appraisal company, the Distributor is a leading distributor of all cheese types in Russia and the number one supplier of hard cheeses such as Gouda and Edam to this market. Under the binding term sheet, NewCo will continue to be engaged in the import and distribution of European and local cheese products to customers in the Russian market. In addition, NewCo will seek to engage in new and complementary activities such as importing Willi Food subsidiary's innovative brands of kosher and healthy living dairy products to satisfy, according to HLB, the growing demand for premium branded imported dairy products in Russia.

In consideration for the 51% interest in NewCo, Willi Food will pay to NewCo four times NewCo's net profit after all applicable taxes and dividend distributions, as shall be determined according to NewCo's audited financial statements for the year 2008. 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. The loan will be based on 50% of the aggregate net profits of the Distributor for the year 2007. The loan shall bear an interest rate of US LIBOR prime + 3% per year and is to be converted (with accrued interest) to equity with the remaining consideration payable by Willi Food to NewCo within 14 days following the publication of the audited financial results of NewCo for 2008. Willi Food will also have the option, within 60 days after the release of the Distributor's audited 2007 financial income statement, to change the consideration terms to be four times the aggregate net profit of the Distributor after all applicable taxes and dividend distribution, as shall be determined from the Distributor's 2007 audited financial statements. Willi Food has a put option, exercisable within 12 month from closing, to sell all its holdings in NewCo to the current owners of the Distributor for the full amount paid by Willi Food to NewCo.

The current owners of the Distributor would be appointed CEO and COO of NewCo respectively for a term of at least five years. Willi Food would appoint the Chairman and the CFO of NewCo. The owners of the Distributor and Willi Food would each appoint an equal number of directors in Newco so long as their holdings' in Newco remain unchanged. Willi Food will have "effective control" over NewCo.

Mr. Zwi Williger, President and COO of Willi Food commented, "We are very excited about this transaction, which represents a bold step for Willi Food as we continue to expand our global footprint. According to market data, over 650,000 tons of cheeses are consumed in Russia each year of which roughly 50% is imported. We believe that 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."

"This acquisition is an example of how we are able to leverage our relationship with Willi Food Investments' new strategic investor in a way that directly benefits G. Willi-Food International. Russia possesses a strong and rapidly developing consumer market. According to HLB, purchasing power of consumers concentrated around well-developed cities and economic and industrial zones in Russia such as St. Petersburg and Moscow is steadily rising. Consumers in these areas are actively buying premium imported dairy products over products of local origin." concluded Mr. Williger.

Gil Hochboim, Vice President of Willi Food, who is responsible for mergers and acquisitions said, "We believe that this is an opportunity for Willi Food to enter a large and growing market that falls well within our core business and area of expertise. We are targeting synergistic acquisitions that enhance our global infrastructure by providing additional international distribution channels or penetration into new markets. We anticipate that Willi Food's majority share of NewCo will be accretive to earnings."

The Company will host a conference call to discuss Willi Food's global expansion strategy on October 23, 2007, at 11:00 AM EDT. Interested parties may participate in the conference call by dialling 877-407-0778 (US), or +1-201-689-8565 (International) 5-10 minutes prior to the start of the call. A replay of the conference call will be available from 1:00 PM EDT on October 23 through 12:00 PM EDT on November 6, by dialling 877-660-6853 (US), or +1-201-612-7415 (International), and entering replay account 286 and then replay ID# 259409.