Is G.Willi Food-International Nestle's Next Takeover Target?

Includes: NSRGY, WILC
by: Aaron Katsman

Is Nestle (OTCPK:NSRGY) trying to expand even further into the Kosher food business? It already owns a controlling interest in the Israeli food giant Osem [OSEM.TA], and on Wednesday the Times Online reported, that Goldfrost, a subsidiary of G. Willi Food-International Ltd. (NASDAQ:WILC), may be a target of the largest food and beverage company in the world. G. Willi Food still controls 76% of Goldfrost, and Goldfrost, which IPO'd in March ’06 on the AIM market, posted revenues of $3.75 million in the 1st quarter.

Nestle’s purported move highlights what I wrote about the explosive growth of the Kosher food market. This validates G.Willi Food’s plan of aggressively entering the U.S. market with its wide array of Kosher food products. Aside from the quick few million dollars it would pocket from such a sale of the Goldfrost subsidiary, I believe this could help forge some kind of relationship with the parent company as well, which would be a big, and unexpected benefit to G. Willi Food.

Based on its financials, it is already an attractive investment opportunity. Its PE is under 11 which is more than half the industry norm. With revenues increasing by over 25%, and strong gross margins,G. Willi Food continues to be an intriguing investment for years to come.

Disclosure: The author’s fund is long WILC as of June 6, 2007.

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