TEL AVIV Feb 25 Israel's Strauss Group unit, Strauss Coffee, is likely to list in September in New York or Amsterdam, a source familiar with Strauss Coffee said on Tuesday, allowing TPG Capital Management to halve its 25-percent stake.
A minimum of 20 percent of Strauss Coffee will be sold in the initial public offering (IPO), the source said, and Goldman Sachs, Barclays and Citi have been retained as underwriters.
The source estimated that based on 12-13 times EBITDA Strauss Coffee could be valued at $2 billion.
U.S. buyout firm TPG, which bought its stake in 2008 for $293 million, has been feuding with Strauss ever since TPG tried to keep Todd Morgan, a former TPG employee, from losing his job as chief executive of the coffee firm. It lost that fight in court and Morgan was ousted last month.
"Strauss can't openly oppose an IPO but they are trying every possible angle to try to delay it," the source said.
As well as TPG's shares, the offer will consist of Strauss Group stock or new shares to be issued by Strauss Coffee.
Strauss Group prefers to hold the IPO in Amsterdam, where Strauss Coffee is incorporated but may be persuaded to list in New York, the source said.
"Eventually they will have to do what the market requests. New York would probably be a better venue for that stock," the source said. "What's important is to create reasonably good governance, then the investor can price fairly."
A Strauss Group spokeswoman said the company was examining various alternatives for TPG to exit its investment.
"The parties have begun to prepare for a possible offering. At this stage it is too early to comment on a valuation for the company, which if it goes public it will only be in the second half of the year and any information regarding a company valuation at this stage is not accurate," she said.
Strauss Coffee generated sales of 2.9 billion shekels ($824 million) and operating profit of 318 million shekels in the first nine months of 2013. The unit, which operates in Israel, Brazil, Russia, Poland, Romania and Ukraine, accounts for about half of Strauss Group's sales and operating profit.
A spokesman for TPG declined to comment.
Strauss Coffee's board is looking for a new CEO. A number of candidates are being screened and the board has committed to completing the process within three months.
"The company will have to have better governance that will require independent directors and committees," said the source. "Any listing will require that."