Strauss Group Sign an Agreement With the Italian Coffee Company Don CafÃ

15/05/08 Strauss Group announced this morning that an agreement had been signed between Strauss Coffee and the Italian company Don cafà for the acquisition of the latter's coffee business in Albania, Kosovo and Macedonia, its trademarks Don cafà and Princ which are registered in a number of countries in the EU as well as in Central and Eastern Europe, as well as fixed assets, inventory and working capital.

The business that was acquired is profitable and its turnover totaled approximately 4.5 million Euro in 2007.

Strauss Coffee paid 7.5 million euro for the business, the brands, inventory and the fixed assets.

Erez Vigodman said:" this acquisition is complementary to our operations in the former Yugoslavia countries and it supports our continued expansion in this region, which has great growth potential. In the past few years we have been active in this region with the Doncafà brand, mainly in Serbia, Montenegro and Bosnia, and have turned it into a leading brand in these countries in the roast and ground (R&G) coffee segment and other coffee related products and services by applying a well designed marketing and communications strategy, while also building a state-of-the-art R&G production facility to world standards in Serbia. Acquiring a business whose name and major brand are the same as ours , will enable us to explore the possibility of extending the use of the brand to other geographies, after checking the viability of such moves, while leveraging the know-how, competencies and infrastructures we have built in this part of the world to more countries, and perhaps even to other geographical regions."

About the transaction:

Doncafe Italy is active in the R&G category through the brands Don and Princ. Strauss Coffee is active through the brand "Doncafe" in Serbia, Montenegro and Bosnia, after having acquired the Doncafà Company in Serbia. The transaction, closed in 2005, granted Strauss ownership of the Doncafà brand in these countries only. Strauss Coffee has significantly grown its business in these countries in the past few years, developing a marketing and communications strategy for the brand and establishing a world-class coffee plant. During the same period the Italian Doncafà business (now being acquired) was active mainly in Albania, Macedonia and Kosovo, focusing on espresso coffee.

The transaction grants Strauss complete ownership of the brand and of a number of sub-brands, and includes the acquisition of the existing production facilities in Albania.

The Princ brand is considered a leading brand and possesses the largest market share in R&G coffee in Kosovo, while Doncafà is considered the second-largest brand in Albania in the same category.

The sales turnover acquired totaled approximately EUR 4.5 million in 2007.

Strauss plans to explore the possibility of extending the brand's business to other countries in which the group is active. The acquired operations will be managed by Strauss Coffee in Serbia, and the products under the acquired brands will be manufactured in part in the plant in Albania and in Strauss Coffee's existing plants in the region.

The acquisition will be financed from the company's internal resources.