Strauss Group to Acquire Coffee Company in Brazil

The parties undertook to sign a definitive agreement that will include the terms and conditions of the Letter of Intent as well as other terms and conditions customary in such agreements.

3/24/2011 --- The Company hereby announces that Tres Coracoes Alimentos S.A., a 50% joint venture of Strauss Coffee B.V. (74.9%) and Sao Miguel FIP, has signed a Letter of Intent to acquire the business of the coffee company "Fino Grao", which operates mainly in the Minas Gerais province and its capital Belo Horizonte, in Brazil.

Fino Grao sales in 2010 were approximately 32 to 35 million BRL (approximately 68 to 74 million NIS). The sales are comprised primarily of roast and ground coffee as well as cappuccino and espresso products. Fino Grao is the second-largest in market share in Belo Horizonte after Tres Coracoes.

This transaction will facilitate the capture of several synergies between Fino Grao and Tres Coracoes. Tres Coracoes will pay in consideration of Fino Grao's coffee business, including trademarks, fixed assets and customers, without liabilities, an amount which represents a multiple of around one time annual sales of Fino Grao in 2010.

Tres Coracoes will conduct a due diligence review of the Fino Grao business. The parties undertook to sign a definitive agreement that will include the terms and conditions of the Letter of Intent as well as other terms and conditions customary in such agreements.

The transaction, which is expected to be closed by June 11, 2011, is conditional, inter alia, on receipt of all required approvals from the authorities in Brazil. The transaction will be funded from internal resources and bank credit. No additional significant investments will be required in the acquired business.