Israel's Strauss Coffee, the world's fifth largest coffee company in terms of green coffee procurement, said on Sunday it signed an agreement to operate German producer Viva Coffee's plant for up to eight years.
Strauss Coffee, a unit of Israeli food maker Strauss Group , said it will operate the plant in Upahl, Germany, for five years with an option for another three plus a call option to buy Viva Coffee, for an enterprise value of 53 million euros ($68.5 million).
The company intends to produce freeze-dried coffee products, mainly for its subsidiaries in Russia and Commonwealth of Independent States countries, it said in a statement to the Tel Aviv Stock Exchange.
Viva Coffee, a maker of private label products and freeze-dried instant coffee, has received loans from German banks totalling 28.6 million euros and will pay back 2.6 million euros a year plus interest.
Should Strauss Coffee exercise its option to extend the agreement, it will have to pay the balance of the loans and pay the owners of Viva Coffee 750,000 euros.
The deal is subject to approval by German banks.