G. Willi Should Gain From Russian Poultry Deal

| About: G. Willi-Food (WILC)

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 (NASDAQ: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 that may do 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.

Disclosure: Author's fund is long WILC