Strauss Water is entering the water purification market at an investment of $7.69 million.
Food manufacturer and marketer Strauss Group Ltd. (TASE:STRS) is expanding its cooperation with China’s Haier Group into the field of water purification.
Strauss said today that the parties have signed a non-binding Memorandum of Understanding (MOU) for the re-organization of their businesses. Strauss said, “The parties intend to merge and to expand the venture’s joint activity, along with Haier’s activity for reverse-osmosis water purification devices, which were until now owned by Haier, and additional water-related products.”
Under the terms of the agreement, Strauss will pay Haier $7.69 million, will own 34% of the joint venture, and will provide the company with a license to use Maze technology, which was developed by Strauss Water and is used to filter and purify water in devices sold in China.
Strauss will have an option to buy 15% more of the merged company’s shares, which will buy products that were manufactured using technology developed by Strauss, and will receive distribution, sales, and service from Haier Group.
The company, controlled by Ofra Strauss, noted that the completion of the deal is contingent upon due diligence, receipt of licenses from the Chinese authorities, and the signing of a series of binding agreements between the parties, which are expected to take place within three months.
Strauss said that the merged company’s turnover for 2014 was $55.1 million (pro-forma), up 67% from 2013.
During 2010, Strauss signed a deal to establish a joint water venture in China with international Haier Group, with an investment of $20 million in equal parts by both parties.
In its most recent financial report, for the third quarter of 2014, Strauss reported that it “sells an array of Strauss Water products in more than 50 Chinese cities.”
The majority of Strauss’s water activity today takes place in Israel, under the brand Tami 4. The company is also active in the UK.
Strauss has been active in the household water market since 2007, when it signed an investment agreement with the H2Q water venture, which was launched by a group of scientists and entrepreneurs from the Hebrew University of Jerusalem. In 2009, Strauss acquired Tami 4, which manufactures home-drinking-water-purification systems, for $76.9 million, from FIMI Opportunity Fund (FIMI) and Kibbutz Netiv HaLamed-Heh.
Published by Globes [online], Israel business news – www.globes-online.com