Aaron Katsman
www.IsraelNewsletter.com

I was never big on bragging, well maybe I was, just never had much of a chance, but today’s news that G. Willi Food Intl (WILC) signed a binding term sheet with the owners of a Russian dairy distributor was predicted. The distributor is a leading supplier and importer of dairy products in Russia, and together they will form a new joint company. Willi Food would hold a 51% interest in the new company. This reminds me of the Philosopher Kings classic lyrics, “I am the man, that’s what I am.  I’m a straight shooter with a master plan.” Okay, to all you jokesters out there (and you know who you are) who are now going to remind me of some of my less-than-stellar analysis, give me a break and let me have my fun.

For ‘07, analysts think this distributor will sell roughly 36,000 tons of cheese products to a base of over 1,000 customers in Russia and generate an estimated $120 million in sales.  According to HLB Prime Advice, a Russian appraisal company, the distributor is a leading distributor of all cheese types in Russia and the biggest supplier of hard cheeses such as Gouda and Edam to this market. I love my GOUDA cheese! Nothing like watching football with some Gouda and crackers. This follows on what I have said in the past: that G. Willi is making a big push into the Russian food market.  It’s become clear that with growing wealth and more disposable income, Russian consumers have created a large demand for imported, premium products. G. Willi can help satisfy that demand with their broad selection of healthy dairy products and other foodstuff.

Mr. Zwi Williger, President and COO of Willi Food commented, “We are very excited about this transaction, which represents a bold step for Willi Food as we continue to expand our global footprint. According to market data, over 650,000 tons of cheeses are consumed in Russia each year of which roughly 50% is imported. We believe that NewCo will provide a well-developed distribution platform for Willi Food and its subsidiaries to drive market demand for dairy products in all categories including premium branded products, kosher and healthy living styled dairy products, as well as other categories.”

As I write this, my local Dolphins fan (ouch), Zack “Facebook“Miller, asks,” What’s their competitive moat?” First of all, what the heck is a Moat? Anyway, the answer lies in Arkadi Gaydamak.  He owns the parent company Willi Food Investments and he is the largest egg distributor in Russia. He himself is a huge distribution channel, and with this new deal, look out. Willi will carve out nice marketshare in the Russian food market.

How is that for some Moat!

If you are looking for a small food company that’s about to explode onto the global scene, have a long look at G. Willi. The stock has taken a hit, and looks attractive as a long-term investment.

Please see our Disclaimer HERE.

Disclosure: Author has a position in WILC as of 10/22/07. Author has no holdings in any other stock mentioned.

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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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By Aaron Katsman
www.IsraelNewsletter.com

I have received many requests by loyal Newsletter readers, to help clarify last week’s announcement of a non-binding memorandum of understanding to buy 51% of the Russian eggs and slaughterhouse company owned by Arcadi Gaydamak(also majority owner of G.Willi) for an estimated $32.6 million.

As it was a holiday week in Israel, there were conflicting reports as to which entity was the potential buyer. G.Willi(WILC)  or Willi Food Investments( the parent company which trades on the Tel-Aviv exchange). Thanks to alert reader Amit Chokshi, who was correct to note that it was indeed the Israeli company, who may do to the deal.

The question many have asked me is if there will  be any impact for WILC shareholders?

I think the answer is a resounding “Yes”.

G. Willi will now enjoy a huge distribution channel in Russia for all of their food business. G. Willi had no penetration into this market and if their parent company does a deal in Russia, it will certainly help G. Willi gain a foothold there.

I actually think US investors are underestimating this potential and the stock is still trading at very attractive levels.

 Please see our Disclaimer HERE.

Disclosure: Author’s fund is long WILC as of 10/07/07.

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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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By Aaron Katsman
www.IsraelNewsletter.com

G. Willi-Food(WILC), one of Israel’s fastest growing food companies and IsraelNewsletter favorite,  has announced a non-binding memorandum of understanding to buy 51% of the Russian eggs and slaughterhouse company owned by Arcadi Gaydamak(also majority owner of G.Willi) for an estimated $32.6 million. Many believe that Gaydamak wants to merge his egg and poultry business in Russia with Willi-Food, and then Willi-Food will manage the entire business. Gaydamak is the largest supplier of eggs in Moscow and this deal will give Willi-Food a significant market share in the Russian market. Willi-Food also intends to begin marketing kosher food products to Moscow’s Jewish community.

Since last week when I wrote that the stock had dropped to attractive levels and was a good trade, the stock has moved up about 12%. In analyzing the company most analyst focus, including my own, was always focused on their kosher food business in the U.S. This news of breaking into the Russian market, makes for an intriguing long-term investment. Now they plan on growing the business on two seperate tracks, something that should propel revenues sharply higher, and change the company from a niche food company into a truly global food play.

I think that all this news adds up to the fact we can say “Dos V’danya” to these low stock prices.

Please see our Disclaimer HERE.

Disclosure: Author’s fund is long WILC as of 10/03/07.

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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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