Strauss Group Announces it will purchase an additional 15% of the shares in Haier Strauss Water Joint Venture
Strauss Group Strengthens its position in the Chinese Residential Water Market and Announces it will purchase an additional 15% of the shares in Haier Strauss Water Joint Venture for NIS c78.3 million via its subsidiary Strauss Water
Strauss Group announces that its subsidiary Strauss Water Ltd. (“Strauss Water”) has exercised its option to acquire an additional 15% of the shares in the Joint Venture Qingdao HSW Health Water Appliance Co., Ltd (“Joint Venture”) as per the Joint Venture agreement and as part of the reorganization process which commenced in 2015 and which has now reached its successful outcome with this purchase. Following the share purchase the Joint Venture will be held 51% by companies of the Haier Group and 49% by Strauss Water.
Strauss Water will pay the Haier Group Company NIS 78.3 million within 90 days. The price of the shares was determined based on the financial results of the Joint Venture for 2016 as agreed upon in the Joint Venture agreement. The proceeds will be financed by a shareholder’s loan that Strauss-Group provided Strauss Water with.
Gadi Lesin, President and CEO of Strauss-Group said: ” This purchase further strengthens Strauss’ presence in the residential water market in China, one of the largest and fastest growing markets globally and coincides with Strauss-Group’s recent strategic acquisitions (25.1% stake in Strauss Coffee and the minority acquisition in Strauss Water and the sale of the Max Brenner business) and the company’s long term strategy to strengthen its holdings in its core businesses alongside the strengthening of the relationships with its partners.”
Ronen Zohar, CEO of Strauss Water said: “Our business in China represents an important journey we started a few years ago with the ultimate goal of becoming the leading water company in the geographical regions we operate in. The potential in China is huge, and together with Haier we have the ability to bring this potential to fruition by supplying the demand of the Chinese residential market for innovative water purification solutions, as we did in Israel”.
The Joint Venture develops, installs, sells and services water purification solutions. The Joint Venture’s 2016 annual revenues totaled NIS 352 million, up 36% on the previous year’s sales (*). For the first quarter of 2017 the Joint Venture’s sales totaled NIS 117.9 million, up from NIS 59.2 million in the first quarter of 2016, an increase of c100% (**). The net profit of the Joint Venture for 2016 amounted to NIS30 million (*) and net profit for the first quarter of 2017 amounted to NIS 9.5 million, compared to the net profit in the first quarter of 2016 of NIS 6.1 million, an increase of 55% (**).
Estimated at c$ 6 billion with an impressive annual double digit growth rate, the Chinese residential water purification market is estimated to be one of the largest in the world. The expectation for this growth trend is to continue over the next few years supported by a growing number of Chinese families demanding modern water purification solutions as opposed to more traditional water purification methods such as boiling water and using large plastic water jars.
Strauss signed the Joint Venture agreement with Haier at the end of 2010 and introduced the first Joint Venture products at the end of 2011. Nowadays the Joint Venture markets a wide variety of residential water purification solutions.
(*) based on the audited financial results of the Joint Venture for the year ending December 31st, 2016
(**) unaudited based on 100% of the company
The figures above do not include adjustments for excess costs incurred at the original date of entry into the Joint Venture
For further information please contact:
Director of Investor Relations | Strauss Group
49 Hasivim St., Petach Tikva | 49517
Phone: + 972-3-675-2545 | Mobile: + 972-54-577-2195
VP Communications & Digital, Spokesperson
Strauss Group Ltd.
External Communications Director
Strauss Group Ltd.