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Israeli Tnuva further to expand in Romania, looks to expand overseas

The Tnuva Food Industries Ltd. deal is due to close yesterday, although the management structure under the new owners has not yet been hammered out.

One thing is clear, however, the new owners, Apax Partners and Mivtach Shamir Holdings Ltd. did not buy Tnuva in order to keep in only in the Israeli market, and the Romanian market is not the target either. Outgoing Tnuva CEO Arik Raichman says, “The domestic market is saturated. It will grow by 5-8% a year, and if you want to leverage the company’s capabilities, you have to go abroad. That’s obvious to everyone.” Raichman will be leaving the company next week, after 11 years. Tnuva’s turnover is 6 billion shekels ($1.56 billion) a year, of which just 5% is from overseas: the company’s activity in Romania, and kosher exports to the US. Tnuva took its first big international step, when it set up a Romanian dairy at an investment of €55 million. In the summer of 2007, the company began marketing products in Romania under the Tnuva and Yoplait labels.

Tnuva has no plans to stop in Romania. Raichman says that the next targets are India and other emerging markets, and that the first practical steps have already been taken. Globes has reported that the company is in negotiations to buy more dairies in Eastern Europe. Raichman said, “Tnuva aims to become a leading food company in Israel and will spread to new areas overseas: Romania, other countries in Eastern Europe, India, and other emerging markets. I think that within five to seven years, Tnuva should have $1 billion in international activity.” Tnuva has advantages in know-how and experience in the establishment of dairies and dairy production for its planned international expansion. These advantages are derived from the company’s control of the entire dairy production process from the dairy to the production of finished products and marketing to consumers. Raichman added that Tnuva aims to become the number one or number two dairy company in the markets that it targets. “Tnuva is currently located in one country, and I assume that it will enter another one every couple of years.” (