Food and Beverage Industry Snapshot
Transcription
Food and Beverage Industry Snapshot
JANUARY 2014 Middle Market Investment Banking Food and Beverage Industry Snapshot QUARTERLY U.S. M&A DEAL VOLUME AND VALUE Page 1: Food and Beverage Industry Highlights LTM NOVEMBER 2013 M&A VOLUME BY SECTOR LTM NOVEMBER 2013 M&A VOLUME BY SECTOR Dairy 8.3% Deal Volume n n n $25 100 $20 Beverage 17.8% Mfr. 11.0% $15 Retail 12.2% Protein 14.2% $10 Source: Capital IQ and SRR research 82 2Q13: 85 H.J. Heinz acquired by 3G Capital and Berkshire Hathaway for $28.7 billion 80 Smithfield Foods acquired by Shuanghui International 3Q13: for $7.0 billion Q1 Q2 Q3 Q4 1Q13: Ralcorp Holdings acquired by ConAgra for $6.8 billion 1Q13: Supervalu’s Albertsons, Acme, Jewel-Osco, Shaw’s 2012 and Star Market stores and related Osco and Sav-on instore pharmacies acquired by a consortium led byVolume Cerberus Capital Management for $3.3 billion 1Q13: Dean Foods’s Morningstar Foods division acquired by Saputo Inc. for $1.45 billion 4Q13: U.S. Foods acquired by Sysco from private equity investors CD&R and KKR for $8.4 billion (announced only) QUARTERLY U.S. M&A DEAL VOLUME VALUE QUARTERLY U.S.AND M&A DEAL 120 115 110 Q1 Q2 106 100 $40 $35 $30 $25 100 97 $20 $15 Value 88 87 90 $0 Q3 110 2013 105 95 $5 VOLUME AND VALUE $10 82 85 80 Q1 Q2 Q3 Q4 Q1 $5 Q2 2012 2012 Deal Value ($ billions) n $35 $30 97 Packaged / Deal Volume n Ingredients / Flavors 20.2% Baked / Snack Food 10.0% However, if 2012 was the year of private business 88owners seeking 87 90 to minimize taxes, 2013 was the return of the “mega” deal: n $40 Foodservice Distribution 6.2% Deal Value ($ billions) In 2013, merger and acquisition activity in the food and beverage 120 industry mirrored trends seen in the overall market. The increase in the tax rate on long term capital gains (which became effective 115 January 1, 2013) pulled forward transactions into the 2012110 tax year110 that might otherwise have been completed in 2013. For the 106 broader M&A market, this resulted in a record number of deals completed 105 in the fourth quarter of 2012 followed by a record decline (40%) quarter over quarter in transactions completed in the 100 beginning of 2013. Food and beverage exhibited a similar dynamic with a 39% decrease in closed deals quarter over quarter 95(i.e. 4Q12 vs. 1Q13). $0 Q3 2013 2013 Source: Capital IQ and SRR research Volume Value ENTERPRISE VALUE / EBITDA ENTERPRISE VALUE / EBITDA ENTERPRISE VALUE / EBITDA 16.0x 14.0x 12.7x 11.6x 11.7x 11.5x 11.4x 12.0x 10.0x 13.1x 12.5x 9.8x 8.9x 9.4x 9.9x 10.3x 8.5x 8.9x 9.2x 10.0x 9.9x 9.8x 10.3x 9.7x 16.0x 13.6x 14.0x 12.2x 12.7x 10.0x 10.4x 9.8x 8.9x 9.4x 9.9x 10.3x 8.5x 8.9x 9.2x 6.0x 8.0x 7.1x 7.7x 2.0x 0.0x 5.4x Packaged / 4.9x Manufactured 6.0x Food 10.3x 9.7x 8.9x 9.7x 9.0x 8.5x 4.0x 10.0x 9.9x 9.8x 8.0x 8.9x 12.6x12.2x 12.5x 13.1x 13.6x 12.6x 11.6x 11.7x 11.5x 11.4x 12.0x 11.3x 10.4x 11.3x 9.0x 8.5x 10.2x 7.7x 7.1x 9.4x 9.7x 4.9x 10.3x 10.2x 9.4x 8.4x 8.2x 7.0x 6.5x 5.4x 5.8x 6.0x 5.7x 5.6x 6.7x 6.9x 6.5x 10.3x 7.2x 8.4x 8.2x 7.0x Baked / Snack Foods 6.5x Dairy Beverages 5.8x 6.0x 5.7x 5.6x Protein 6.7x 6.9x Ingredients / Flavorings 6.5x 7.2x Retail Foodservice Distribution 4.0x 2.0x 0.0x Packaged / Manufactured Food Baked / Snack Foods Dairy Beverages Protein Ingredients / Flavorings Retail Foodservice Distribution Source: Capital IQ and SRR research Nick P. Jachim +1.312.752.3396 [email protected] Gian G. Ricco +1.312.752.3359 [email protected] Timothy Cummins +1.312.752.3305 [email protected] Marcus Ewald +1.312.752.3346 [email protected] www.srr.com Page 2: Revenue Growth n n n After rebounding from lows seen post-recession, overall food and beverage industry revenue growth flattened in 2013. Part of this slowdown can be attributed to a recent relatively tame (beef, pork) to declining (corn, wheat, soybeans, sugar, coffee) commodity environment, but it also reflects normalized volumes across most of the industry with only a few exceptions (e.g. gluten-free, craft beer). F&B MEDIAN INDUSTRY REVENUE GROWTH F&B MEDIAN INDUSTRY REVENUE GROWT 12.0% 9.8% 10.0% 8.5% 8.5% 8.0% 6.0% 4.0% 2.5% 2.0% 0.7% 0.0% 2009 2010 2011 2012 LTM Revenue Growth Source: Capital IQ and SRR research Profit Margins n n n Margins in 2013 benefited from the aforementioned softening commodity environment, as manufacturers have been able to support prices to their customers in spite of flat to falling input prices – a common lag effect (and a welcome relief to margin pressure experienced in a rising cost environment). F&B MEDIAN GROSS PROFIT & EBITDA MARGIN F&B MEDIAN GROSS PROFIT & EBITDA MARGIN 30.0% 25.0% 20.0% 27.2% 27.4% 27.1% 27.2% 27.7% 10.1% 11.3% 10.9% 10.1% 10.3% 2009 2010 2011 2012 LTM 15.0% 10.0% 5.0% 0.0% EBITDA Margin Gross Profit Margin Source: Capital IQ and SRR research 16.0x 1.4x 14.0x 1.2x 12.0x 1.0x 10.0x 0.8x 8.0x 0.6x 6.0x 4.0x 8.7x 8.0x 9.3x 10.4x 10.4x 0.2x 2.0x 0.0x 0.4x 2009 2010 2011 2012 LTM EV / EBITDA EV / Sales Multiple Surprisingly, in spite of the lack of high quality companies for sale, the accommodative credit markets, and the overall increase in average deal size due to the aforementioned “mega” deals, overall reported transaction multiples paid by acquirers were down slightly in 2013 vs. last year. However, it is our view that valuation multiples are actually near all time highs for those targets with even the most marginal of buyer appeal. We base this view on our own first-hand knowledge and non-public intelligence of multiples paid this year, and (as seen on the previous page) the valuations seen for comparable companies in the public equity markets. F&B MEDIAN TRANSACTION MULTIPLE F&B MEDIAN TRANSACTION MULTIPLE EV / EBITDA Multiple Transaction Multiple n n n 0.0x EV / Sales Source: Capital IQ and SRR research Page 3 – graph 1 (revised) Recent Trends and Transactions by Food & Beverage Sector Packaged / Manufactured Food n n n n Manufacturers continue to focus on serving consumer demand for healthy, appetizing and affordable packaged foods that accommodate busy lifestyles. n n n n Overall industry estimates for 2014 are for 4% revenue growth and expanding margins from easing commodity prices, which should free up capital for greater investment in promotion and R&D. Similar to Packaged / Manufactured, producers need to adapt to changing diets (healthy, gluten-free) and food preferences (blurring of eating occasions) in order to spur growth. Overall industry revenue should grow on average 4%-5%, with nuts/seeds, yogurt and granola bars growing faster than the industry average, and frozen novelties and ice cream (excluding super-premium) growing slightly slower than the industry average. Private label share was flat YoY at 12.5% of volumes; nonchocolate candy and granola bars were private label winners, cookies and nuts/seeds saw private label volumes decline. The fluid milk industry continues to face challenging trends as overall industry volumes were down 2.3% in the first three quarters of 2013; milk volumes have been impacted by beverage substitution, a decline in birth rates, and weakening cereal consumption. Innovative dairy products that address consumer trends are the exception, especially high protein drinks (e.g. KO’s Core Power, DF’s TrueMoo Protein). The increasing popularity of strained (i.e. Greek-style) yogurt also helped offset flat fluid milk consumption. Beverages n n n n Sep-13 Aug-13 Jun-13 Acquisition of Ralcorp by CAG for $6.8 billion underscores the continued importance of private label. Dairy n Oct-13 Natural, organic and gluten-free foods will likely continue to be areas of new product focus. Baked / Snack Food n Close. Date Nov-13 Health consciousness and demand for trending beverages among consumers are keys to driving growth. Major soda producers have responded to the near saturation of the soft drink market by expanding their product ranges to include sports and energy drinks, tea and coffee, bottled water, and newer beverage categories. Craft beer volume growth (15% in 2012) continues to outperform growth in overall beer sales (0.9% in 2012). Acquisition rationale remains access to distribution as much as product, operational needs. Target Conopco, Inc., Skippy Peanut Butter Business Associated Brands, Inc. Dakota Growers Pasta Company, Inc. Overhill Farms, Inc. H. J. Heinz Company Acquirer Value Beijing Hormel Business Management Co. Ltd. Treehouse Foods, Inc. (NYSE:THS) Post Holdings, Inc. (NYSE:POST) $700 Jan-12 Bellisio Foods, Inc. Berkshire Hathaway Inc. (NYSE:BRK.A); 3G Capital, Inc.; 3G Special Situations Fund III LP Hearthside Food Solutions, Attune Foods, Inc. LLC, Organic and Natural Cereal, Granola and Snacks Business Ralcorp Holdings Inc. ConAgra Foods, Inc. (NYSE:CAG) Nov-12 The Balance Bar Company May-13 NBTY, Inc. $181 $370 $88 $28,686 $158 $6,800 $78 Close Date Annc’d. Target Acquirer $410 Hackman Capital Acquisition Company, LLC Investcorp Bank B.S.C. $63 Oct-13 Aug-13 Tyrrells Potato Crisps Ltd. Jul-13 ARYZTA LLC, Certain Flowers Foods, Inc. (NYSE:FLO) Assets Robert's American Gourmet B&G Foods North America, Inc. Food, LLC Labriola, Inc. C3 Capital, LLC (and others) Jul-13 Jun-13 Feb-13 Dec-12 Close Date Annc’d. Bimbo Bakeries USA, Inc., Flowers Foods, Inc. (NYSE:FLO) Certain Assets and Trademark Licenses Mary's Gone Crackers, Inc. Kameda Usa, Inc. Target Acquirer Jun-13 Warrnambool Cheese And Bega Cheese Limited (ASX:BGA) Butter Factory Company Holdings Limited (ASX:WCB) Primera Foods Corporation M.G. Waldbaum Company Jun-13 R&R Ice Cream Plc Jan-13 Morningstar Foods, LLC Nov-12 Maxim Production Co., Inc., Cal-Maine Foods, Inc. Egg Production Assets (NasdaqGS:CALM) Calpis Co., Ltd. Asahi Group Holdings, Ltd. (TSE:2502) Pilgrim's Corp., Commercial Cal-Maine Foods, Inc. Egg Operations (NasdaqGS:CALM) Lactalis American Group, Parmalat Belgium SA Inc. Oct-12 Aug-12 Jul-12 Close Date Annc’d. Sep-13 Sep-13 Graphite Capital Management LLP; PAI Partners; Graphite Enterprise Trust plc (LSE:GPE) Saputo Cheese USA Inc. Target Beam, Inc., Collection of Brands Including Related Inventory GlaxoSmithKline plc, Lucozade and Ribena Brands D.E Master Blenders 1753 N.V. (ENXTAM:DE) Value Apollo Global Management, LLC (NYSE:APO); C. Dean Metropoulos & Co. Hostess Brands, Inc., Certain Snack Cake Brands, Five Bakeries and Certain Equipment Old HB, Inc. Acquirer Luxco, Inc. $152 $10 $195 $25 $50 $26 Value $316 $36 $1,500 $1,450 $69 $1,153 $19 $774 Value $65 Suntory Beverage & Food Limited (TSE:2587) $2,122 $10,442 $2,900 Sep-13 DS Waters of America, Inc. Joh. A. Benckiser GmbH; Donata Holding SE; JAB Holdings B.V.; Parentes Holding SE Crestview Partners, L.P. Jun-13 Compañía Cervecera de Coahuila, S.A. de C.V. Constellation Brands Inc. (NYSE:STZ) Dec-12 Vermont Hard Cider Company, LLC C&C Group plc (ISE:GCC) $305 Dec-12 North American Breweries, Inc. Cerveceria Costa Rica S.A. $388 Page 4: $920 Inc. Page 4: Recent Trends and Transactions by Food & Beverage Sector Protein n n n n Protein prices have stabilized, albeit at elevated levels. Close Date Annc’d. The robust harvest has driven down feed input costs, though not all companies will be able to capture all of the benefits. Sep-13 Acquisition of Smithfield by Shuanghui International for $7.0 billion was notable for its size, and the fact that it is the single largest acquisition of a U.S. target by a Chinese buyer in history. Pockets of secular growth remain, including branded protein products and barbeque / smoked meats. Ingredients / Flavorings n n Secular growth is being driven by a growing number of food, beverage and pharma companies that are increasingly outsourcing ingredients processing and flavorings development, while focusing on core competencies of sales and marketing. Given the proprietary nature of R&D pipelines, combined with the reluctance of key personnel to change firms, it comes as no surprise that the large multinationals continue to look for accretive acquisitions of all sizes. Retail n n n n Food retail has seen a resurgence of deal activity. On the strategic side, Harris Teeter’s sale to Kroger, and SuperValu’s divestiture of several chains to Cerberus, combined for nearly $7 billion in transaction value alone. On the private equity side, in addition to Cerberus, a number of other investors have completed acquisitions of grocery including Apollo, ComVest, Yucaipa, Morgan Stanley, Ares, and Monitor Clipper. C-stores remain highly fragmented; of the 149,000-plus stores, 2/3 are single store operators and the largest 100 chains represent only 40% of the industry’s unit count. Foodservice Distribution n n With restaurant pricing likely to remain relatively conservative in a flat to potentially negative traffic environment in 2014, downward pressure on gross margins will continue. Sysco/USFS merger: even post-merger (estimated ~26% combined share) this is a highly fragmented and price competitive market with ~15,000 distributors nationally; smaller distributors may benefit from customers defecting to diversify suppliers post merger. Sep-13 Jun-13 Mar-13 Mar-13 Jan-13 Close Date Annc’d Target Acquirer Allen Brothers The Chefs' Warehouse, Inc. (NasdaqGS:CHEF) American Skin Food Group, Smithfield Foods, Inc. LLC Smithfield Foods, Inc. Henan Shineway Industry Group Co., Ltd. (Shuanghui Int’l) BRF SA, Ana Rech Pork JBS Aves Ltda and Poultry Industrial Unit Freybe Gourmet Foods, Ltd. Premium Brands Holdings Corporation Inghams Enterprises Pty TPG Capital, L.P. Limited Big Sky Farms Inc. Olymel L.P. Target Earthbound Farms (Kainos Capital) Value $30 $24 $6,965 $99 $59 $900 $67 Acquirer Value WhiteWave Foods Co. (NYSE:WWAV) $600 Annc’d. Austin Packaging Company Bellisio Foods, Inc. Oct-13 Joe White Maltings Pty. Ltd. Cargill, Incorporated $302 Oct-13 Conopco, Inc., Wish-Bone® Pinnacle Foods Inc. (NYSE:PF) Salad Dressings Business $580 Jun-13 Iberchem S.A. Magnum Capital Industrial Partners $104 Apr-13 Eurofresh, Inc. NatureSweet Limited $51 Jun-12 Imperial Sugar Co. Louis Dreyfus Commodities LLC $148 Apr-12 GreenLine Foods, Inc. Apio, Inc. $70 Target Target Piggly Wiggly Carolina Piggly Wiggly Company, Inc.,Carolina 22 Piggly Company, Inc., 22 Piggly Wiggly Stores Wiggly Stores Harris Teeter Supermarkets, Harris Teeter Supermarkets, Inc. (NYSE:HTSI) Inc. (NYSE:HTSI) Delhaize America, LLC, Delhaize America, Sweetbay, HarveysLLC, and Sweetbay, Harveys and Reid's Supermarket Chains Reid's Supermarket Chains Canada Safeway Limited CanadaParticipações Safeway Limited Wilkes S.A. Wilkes Participações S.A. Acquirer Acquirer BI-LO Holding, LLC BI-LO Holding, LLC Value Value $35 $35 The Kroger Co. (NYSE:KR) The Kroger Co. (NYSE:KR) $2,658 $2,658 Close Close Date Date Annc’d. Annc’d. Annc’d. Annc’d. Annc’d. Annc’d. Nov-13 Nov-13 Oct-13 Oct-13 Jul-13 Jul-13 Mar-13 Mar-13 Feb-12 Feb-12 Close Close Date Date Annc’d Annc’d Dec-13 Dec-13 Nov-13 Nov-13 Nov-13 Nov-13 Sep-13 Sep-13 Jul-13 Jul-13 Apr-13 Apr-13 Dec-12 Dec-12 Nov-12 Nov-12 BI-LO, LLC BI-LO, LLC Sobeys Inc. Sobeys Inc. Casino, Guichard-Perrachon Casino, Anonyme Guichard-Perrachon Société (ENXTPA:CO) Société Anonyme The Great Atlantic & Pacific Madison Capital (ENXTPA:CO) The Great Atlantic & Pacific Madison Capital Tea Company, Inc., 2 Food Tea Company, Inc., 2 Food Emporium Stores Emporium Stores Albertson's, Select Stores Cerberus Capital Management, Albertson's, Select Stores Cerberus Capital Management, L.P. L.P. Super Supplements, Inc. Vitamin Shoppe Mariner, Inc. Super Supplements, Inc. Vitamin Shoppe Mariner, Inc. Target Target U.S. Foods U.S. Foods Food Group, Queensgate Queensgate Food Group, LLC LLC Finch Co. Nash Nash Finch Co. (NasdaqGS:NAFC) (NasdaqGS:NAFC) Fresh Frozen Foods, LLC Fresh Frozen Foods, LLC Acquirer Acquirer Sysco (NYSE:SYY) Sysco (NYSE:SYY) The Chefs' Warehouse, Inc. The Chefs' Warehouse, Inc. (NasdaqGS:CHEF) (NasdaqGS:CHEF) Spartan Stores Inc. Spartan Stores Inc. (NasdaqGS:SPTN) (NasdaqGS:SPTN) Inventure Foods, Inc. Inventure Foods, Inc. (NasdaqGM:SNAK) (NasdaqGM:SNAK) Associated Citrus Packers, Limoneira Company Associated Citrus Packers, (NasdaqGS:LMNR) Limoneira Company Inc. Inc. (NasdaqGS:LMNR) Thompsons Limited The Andersons, Inc. Thompsons Limited The Andersons, Inc. Lansing (NasdaqGS:ANDE); (NasdaqGS:ANDE); Trade Group, LLC Lansing Trade Financial Group, LLC Capespan Group Limited Zeder Services Ltd Capespan Group Zeder Financial Services Ltd Inc. J. T. Davenport & Limited Sons, Inc. Core-Mark Holding Company, J. T. Davenport & Sons, Inc. (NasdaqGS:CORE) Core-Mark Holding Company, Inc. (NasdaqGS:CORE) Hancock Cash & Carry Ltd H2 Equity Partners B.V. Hancock Cash & Carry Ltd H2 Equity Partners B.V. $6 $265 $265 $5,690 $5,690 $838 $838 $130 $130 $3,300 $3,300 $50 $50 Value Value $8,200 $8,200 $24 $24 $776 $776 $41 $41 $19 $19 $145 $145 $29 $29 $38 $38 $80 $80 Lean Hogs $2.75 Sugar #11 Jan-14 Jul-13 Jul-12 Jan-12 Jul-11 Jan-11 $0.75 Jul-10 $1.25 Jan-10 Jan-14 Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 Jul-10 Jan-10 Jul-09 $0.15 $1.75 Jul-09 $0.20 $2.25 Jul-08 $0.25 Jan-09 $ per pound $0.30 Jan-09 Jan-14 COFFEE Jan-08 Coffee $3.25 Jul-08 Jan-14 Source: Bloomberg $0.35 Jan-08 $ per pound SUGAR #11 $0.10 Jul-13 Milk Class III Source: Bloomberg Sugar #11 Jan-13 Jul-12 Jul-11 Jan-12 Jan-11 Jul-10 Jan-10 Jul-09 Jul-08 $0.24 $0.22 $0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 Jan-09 CLASS III Jan-08 $ per pound Jan-14 Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 $ per pound Source: Bloomberg Milk ClassMILK III LEAN HOGS $1.10 $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 Jul-13 Live Cattle Soybean Source: Bloomberg Lean hogs Jan-13 Jul-12 Jul-11 Jan-12 Jan-11 Jul-10 Jan-14 Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 Jul-10 Wheat $1.40 $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 $0.70 Jan-13 Corn Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 CATTLE Jan-10 Live cattleLIVE $ per pound [right column] CORN, WHEAT AND SOYBEAN Corn, Wheat and Soybean $ per bushel [left column] Jul-09 Page 6: In sugar, the #11 contract has been trading below the cost of production for 14 months; constrained production should drive prices higher in 2014. In coffee, arabica bean prices remain depressed after a bumper crop in South America flooded the market; however this should stimulate demand and begin to prop up prices early next year. Jul-08 For the past six years, grain markets gyrated from one crop crisis to the next, resulting in low inventories and high food prices. However, the recent record harvest in the U.S. (e.g. corn) and South America (e.g. Brazilian Soybeans) have provided welcome relief to this trend (though at least one more solid season is needed to fully replenish depleted stocks. Jan-09 In general, commodity prices have either eased, or stabilized somewhat (albeit at elevated levels). Within protein, easing grain prices are a mixed bag for packers; it reduces immediate feed costs (which puts downward pressure on costs in the short-term) but also increases the price owners will pay for young cattle (driving up prices in the medium-term). Jan-08 Commodity Trends Coffee Source: Bloomberg Source: Bloomberg Flowers Foods, Inc. FLO 21.70 84.5 5,441.0 47.6 11.0 1.49 13.6 11.1 9.5 2.3 General Mills, Inc. GIS 49.26 92.8 40,098.6 35.6 19.2 2.22 11.5 10.5 9.8 2.5 HSY 95.81 94.5 22,639.4 45.8 21.7 3.26 15.0 13.2 12.2 1.3 Hormel Foods Corporation HRL 44.91 97.2 11,662.9 16.1 10.5 1.33 12.7 11.0 10.6 0.3 Kellogg Company K 60.58 89.1 29,147.9 37.3 14.9 1.96 13.1 10.5 10.1 3.4 10.0 10.6 10.1 2.5 68.55 91.1 10,286.5 16.7 2.51 15.0 PUBLIC COMPANIES ANALYSIS: SELECT OPERATING AND MARKET40.2 PERFORMANCE PARAMETERS 13.3 12.7 2.0 The Hershey Page 7: Company Public Companies Analysis: KRFT Select Operating and Parameters Kraft Foods Group, Inc. 53.45 91.0 Market 40,597.4Performance 33.8 22.3 2.23 McCormick & Company, Incorporated MKC The Hain Celestial Group, Inc. HAIN 90.68 99.2 4,920.9 27.2 13.2 2.66 20.1 15.8 14.5 2.7 The J. M. Smucker Company SJM 101.51 88.5 12,745.5 35.6 20.9 2.19 10.5 9.9 9.6 1.8 Treehouse Foods, Inc. THS 68.98 90.9 3,305.6 21.7 13.6 1.48 10.9 9.2 8.7 3.0 Price per Group Median Share at Group Mean Ticker 1/3/2014 Price as LTM Margins Valuation Multiples 90.9%Enterprise $12,745.5 Gross35.6% 16.7% EV / LTM 2.22x EV / LTM 12.7x EV / 2014E 10.9x EV / 2015E 10.1x Debt/ 2.5x % of 52wk $17,309.2 Margin33.3% EBITDA16.9% Revenue 2.22x EBITDA13.1x EBITDA11.4x EBITDA10.7x EBITDA 2.6x High 91.2% Value Packaged Manufactured Baked & / Snack Foods Food B&GARYZTA Foods Inc. AG BGSARYN $33.82 $69.30 89.8% 99.9% $2,659.8 $7,086.1 34.2% 27.2% 25.9% 12.6% 3.87x 1.57x 14.9x 12.5x 12.7x 11.0x 12.4x 10.3x 4.9x2.7x Campbell Soup Company Diamond Foods, Inc. CPBDMND 42.42 25.27 86.995.8 17,872.9 1,163.5 36.724.4 17.8 4.8 2.231.38 12.628.8 10.9 9.8 10.710.0 3.415.0 ConAgra Foods, Inc. Golden Enterprises Inc. CAGGLDC 33.494.15 89.895.2 23,641.855.4 21.348.7 12.4 4.5 1.360.40 11.0 8.9 9.3 NA 8.8 NA 4.5 1.2 Flowers Foods, Inc.S.A.B. de C.V. Grupo Bimbo, FLOBIMBO A 21.70 38.59 84.581.2 5,441.0 219,015.1 47.651.9 11.010.0 1.491.25 13.612.5 11.110.7 9.5 9.5 2.3 2.3 General J&J Mills, SnackInc. Foods Corp. GIS JJSF 49.26 87.23 92.896.1 40,098.6 1,532.3 35.630.3 19.215.1 2.221.77 11.511.7 10.510.6 9.8 NA 2.5 0.0 The John Hershey Company& Son Inc. B Sanfilippo HSYJBSS 95.81 23.95 94.591.1 22,639.4 332.0 45.816.2 21.7 7.5 3.260.45 15.0 6.1 13.2 NA 12.2 NA 1.3 1.3 Hormel Foods Colony Corporation Lancaster Corporation HRLLANC 44.91 87.01 97.296.7 11,662.9 2,240.9 16.122.7 10.515.5 1.331.93 12.712.5 11.011.7 10.6 NA 0.3 0.0 Kellogg Company Penford Corporation K PENX 60.58 12.10 89.175.7 29,147.9 230.5 37.3 9.6 14.9 4.9 1.960.49 13.110.1 10.5 6.8 10.1 NA 3.4 3.5 KraftInventure Foods Group, Inc. Foods, Inc. KRFT SNAK 53.45 13.34 91.097.0 40,597.4 293.0 33.818.4 22.3 7.9 2.231.46 10.018.5 10.610.9 10.1 9.4 2.5 2.2 McCormick & Company, Incorporated Mondelez International, Inc. MKCMDLZ 68.55 34.75 91.198.1 10,286.5 77,128.1 40.237.3 16.714.5 2.512.18 15.015.1 13.312.9 12.711.9 2.0 3.9 The Snyder's-Lance, Hain Celestial Group, Inc. Inc. HAIN LNCE 90.68 28.44 99.287.5 4,920.9 2,519.1 27.234.4 13.210.7 2.661.46 20.113.6 15.811.2 14.510.0 2.7 NA The J. M. Smucker Company SJM 101.51 35.6 20.9 2.19 10.5 9.9 9.6 1.8 Treehouse Foods, Inc. Group Median THS 68.98 3.0 2.3x Group Mean Group Median Group Mean Dairy Dean Foods Company Fromageries Bel Baked / Snack Foods 88.5 12,745.5 90.995.8% 3,305.6 $1,532.3 21.727.2% 13.610.0% 1.481.46x 10.912.5x 9.210.9x 8.710.0x 92.2% $28,326.9 29.2% 9.8% 1.30x 13.7x 10.6x 10.2x 3.2x 90.9% $12,745.5 35.6% 16.7% 2.22x 12.7x 10.9x 10.1x 2.5x 91.2% $17,309.2 33.3% 16.9% 2.22x 13.1x 11.4x 10.7x 2.6x DF $17.58 41.7% FBEL 279.49 93.2 2,037.1 31.8 $2,330.6 24.0% 5.5% 0.21x 3.7x 5.6x 5.4x 1.6x 12.9 0.76 5.9 NA NA 2.2 ARYZTA AGplc Glanbia ARYN GL9 $69.30 11.05 99.9% 96.1 $7,086.1 3,706.7 27.2% 36.4 12.6%8.7 1.57x 1.58 12.5x 18.2 11.0x 15.6 10.3x 14.2 2.7x2.5 Diamond Foods, Inc. Danone DMND BN 25.27 51.68 95.885.5 1,163.5 38,685.3 24.449.7 4.816.6 1.381.80 28.810.9 9.810.3 10.0 9.6 15.0 3.1 Golden Enterprises Inc. Lifeway Foods Inc. GLDC LWAY 4.15 15.67 95.278.4 55.4 262.4 48.734.0 4.513.6 0.402.85 8.920.9 NA16.6 NA NA 1.2 0.8 Grupo Bimbo, S.A.B. de C.V. Saputo, Inc. BIMBO SAPA 38.59 48.44 81.288.7 219,015.1 11,099.8 51.913.7 10.011.2 1.251.34 12.512.0 10.710.8 9.510.1 2.3 1.9 J&J Snack Foods Corp. JJSF 87.23 96.1 30.3 15.1 1.77 11.7 10.6 NA 0.0 1,532.3 JohnGroup B Sanfilippo Median& Son Inc. JBSS 23.95 91.187.1% 332.0 $3,018.7 16.232.9% 7.512.0% 0.451.46x 6.111.4x NA10.8x NA 9.9x 1.3 2.0x Lancaster Group Colony Mean Corporation LANC 87.01 96.780.6% 2,240.9 $9,687.0 22.731.6% 15.511.4% 1.931.42x 12.511.9x 11.711.8x NA 9.8x 0.0 2.0x Penford Corporation PENX 12.10 75.7 230.5 9.6 4.9 0.49 10.1 6.8 NA 3.5 Inventure Foods, Inc. Beverages SNAK 13.34 97.0 293.0 18.4 7.9 1.46 18.5 10.9 9.4 2.2 GreenInternational, Mountain Coffee GMCR Mondelez Inc. Roasters, Inc. MDLZ $75.75 34.75 $11,297.0 98.184.5% 77,128.1 37.337.2% 14.522.8% 2.182.59x 15.111.4x 12.9 9.4x 11.9 8.7x 3.9 0.3x Monster Beverage Snyder's-Lance, Inc. Corporation 67.52 28.44 87.598.8 34.452.3 10.726.6 1.464.92 13.618.5 11.215.5 10.013.4 NA 0.0 MNST LNCE National Beverage Corp. 10,718.7 2,519.1 FIZZ 20.44 94.7 955.4 34.0 12.2 1.46 12.0 NA NA 0.5 Pepsico, Group MedianInc. PEP 82.24 94.5 95.8% 146,101.3 $1,532.3 52.7 27.2% 18.3 10.0% 2.21 1.46x 12.0 12.5x 10.6 10.9x 10.0 10.0x 2.3x2.4 Anheuser-Busch InBev SA/NV Group Mean ABI 76.46 96.1 92.2% 117,039.9 $28,326.9 58.7 29.2% 38.7 9.8% 2.80 1.30x 13.7x7.2 10.6x6.1 10.2x5.7 3.2x3.1 SAB 30.48 82.7 84,688.4 70.4 32.0 4.93 15.4 11.8 10.8 3.2 STZ 69.39 96.9 13,017.1 39.6 25.1 3.62 14.4 8.0 7.4 8.1 DF DGE $17.58 19.87 41.7% 92.3 $2,330.6 49,181.0 24.0% 61.1 5.5% 33.7 0.21x 4.30 3.7x 12.8 5.6x 11.6 5.4x 10.6 1.6x2.7 SABMiller plc Dairy Constellation Brands Inc. Dean Foodsplc Company Diageo Fromageries StarbucksBel Corporation FBEL SBUX 279.49 76.95 93.293.3 2,037.1 54,757.8 31.857.1 12.919.2 0.763.68 5.919.1 NA14.2 NA12.3 2.2 0.5 Glanbia The plc Coca-Cola Company GL9KO 11.05 40.46 96.193.2 3,706.7 194,705.2 36.460.4 8.727.6 1.584.12 18.214.9 15.613.7 14.212.9 2.5 2.8 Danone BN 51.68 85.5 Lifeway Foods Inc. Group Median LWAY 15.67 78.493.9% Saputo, Inc.Mean Group SAP 48.44 38,685.3 49.7 16.6 1.80 10.9 10.3 9.6 3.1 262.4 $51,969.4 34.054.9% 13.625.9% 2.853.65x 20.913.6x 16.611.6x NA10.6x 0.8 2.6x 88.792.7% 11,099.8 $68,246.2 13.752.4% 11.225.6% 1.343.46x 12.013.8x 10.811.2x 10.110.2x 1.9 2.4x Group Median 87.1% $3,018.7 32.9% 12.0% 1.46x 11.4x 10.8x 9.9x 2.0x Group Mean 80.6% $9,687.0 31.6% 11.4% 1.42x 11.9x 11.8x 9.8x 2.0x 84.5% $11,297.0 8.7x 0.3x Beverages Green Mountain Coffee Roasters, Inc. GMCR $75.75 37.2% 22.8% 2.59x 11.4x Monster Beverage Corporation MNST 67.52 98.8 10,718.7 52.3 26.6 4.92 18.5 15.5 13.4 0.0 National Beverage Corp. FIZZ 20.44 94.7 955.4 34.0 12.2 1.46 12.0 NA NA 0.5 Pepsico, Inc. PEP 82.24 94.5 146,101.3 52.7 18.3 2.21 12.0 10.6 10.0 2.4 Anheuser-Busch InBev SA/NV ABI 76.46 96.1 117,039.9 58.7 38.7 2.80 7.2 6.1 5.7 3.1 SABMiller plc SAB 30.48 82.7 84,688.4 70.4 32.0 4.93 15.4 11.8 10.8 3.2 Constellation Brands Inc. STZ 69.39 96.9 13,017.1 39.6 25.1 3.62 14.4 8.0 7.4 8.1 Diageo plc DGE 19.87 92.3 49,181.0 61.1 33.7 4.30 12.8 11.6 10.6 2.7 Starbucks Corporation SBUX 76.95 93.3 54,757.8 57.1 19.2 3.68 19.1 14.2 12.3 0.5 The Coca-Cola Company KO 40.46 93.2 194,705.2 60.4 27.6 4.12 14.9 13.7 12.9 2.8 Group Median 93.9% $51,969.4 54.9% 25.9% 3.65x 13.6x 11.6x 10.6x 2.6x Group Mean 92.7% $68,246.2 52.4% 25.6% 3.46x 13.8x 11.2x 10.2x 2.4x 9.4x Note: EV = Enterprise value equals market value plus total straight and convertible debt, preferred stock and minority interest, less cash and investments in unconsolidated subsidiaries. Source: Capital IQ and public filings Page 8: PUBLIC COMPANIES ANALYSIS: SELECT OPERATING AND MARKET PERFORMANCE PARAMETERS Public Companies Analysis: Select Operating and Market Performance Parameters Ticker Price per Price as Share at % of 52wk Enterprise Gross LTM Margins 1/3/2014 High Value Margin Valuation Multiples EBITDA EV / LTM EV / LTM EV / 2014E EV / 2015E Debt/ Revenue EBITDA EBITDA EBITDA EBITDA Protein Cal-Maine Foods, Inc. CALM 94.4% $1,293.2 17.5% 10.2% 0.95x 9.3x NA NA 0.4x JBS S.A. JBSS3 8.33 92.7 47,361.0 12.1 6.0 0.54 9.0 6.8 6.4 5.7 Sanderson Farms, Inc. SAFM 73.33 97.1 1,646.2 11.4 10.0 0.61 6.1 6.1 7.9 0.2 Seaboard Corp. SEB 2,771.00 94.0 3,161.4 7.3 4.7 0.48 10.1 NA NA 0.6 Tyson Foods, Inc. TSN 33.42 97.2 12,776.6 6.9 5.5 0.37 6.7 6.1 5.8 1.3 $57.87 Group Median 94.4% $3,161.4 11.4% 6.0% 0.54x 9.0x 6.1x 6.4x 0.6x Group Mean 95.1% $13,247.7 11.0% 7.3% 0.59x 8.2x 6.3x 6.7x 1.6x 94.2% $13,061.1 Ingredients / Flavorings Givaudan SA GIVN 43.3% 19.5% 3.00x 15.4x 12.8x 12.1x 2.0x Kerry Group plc KRZ 49.85 98.5 10,067.3 43.0 11.7 1.71 14.6 12.9 11.8 2.3 International Flavors & Fragrances Inc. IFF 85.92 95.1 7,596.5 43.4 20.8 2.61 12.5 11.3 10.6 1.5 Symrise AG SY1 34.25 95.9 4,520.1 41.6 19.6 2.49 12.7 11.2 10.5 1.7 Sensient Technologies Corporation SXT 48.33 90.6 2,750.1 32.0 17.0 1.87 11.0 9.9 9.0 1.4 Bunge Limited BG 81.25 96.5 22,022.8 4.0 2.5 0.36 14.1 9.7 9.2 6.8 Archer Daniels Midland Company ADM 43.19 98.2 31,835.7 4.1 3.1 0.35 11.3 7.8 7.7 2.4 Ingredion Incorporated INGR 67.46 90.8 6,342.7 18.1 13.0 0.98 7.6 6.9 6.5 2.1 $1,289.00 Group Median 95.5% $8,831.9 36.8% 15.0% 1.79x 12.6x 10.5x 9.9x 2.0x Group Mean 95.0% $12,274.5 28.7% 13.4% 1.67x 12.4x 10.3x 9.7x 2.5x Retail Arden Group Inc. ARDN.A 43.5% 8.1% 0.80x NA 0.0x Costco Wholesale Corporation COST 117.29 93.0 50,311.0 12.6 3.8 0.47 12.4 10.3x 9.5x 1.2 Ingles Markets, Incorporated IMKT.A 26.73 91.1 1,504.0 22.1 5.8 0.40 7.0 6.4 6.1 4.2 J. Sainsbury plc SBRY 3.74 87.4 9,405.5 5.6 6.1 0.39 6.5 6.3 6.1 2.0 Koninklijke Ahold N.V. AH 13.10 92.4 12,053.6 26.2 6.4 0.36 5.7 5.3 5.1 1.4 The Kroger Co. KR 39.10 89.2 28,131.2 21.2 4.6 0.28 6.2 6.0 5.7 1.8 The Pantry, Inc. PTRY 16.22 92.1 1,270.6 11.6 2.9 0.18 6.2 5.5 NA 4.6 Safeway Inc. SWY 32.31 87.6 13,087.1 27.6 4.9 0.30 6.0 8.0 8.1 2.6 SUPERVALU Inc. SVU 7.13 81.4 4,904.1 14.6 4.0 0.29 7.2 6.4 6.1 4.6 Village Super Market Inc. VLGE.A 31.89 80.3 398.3 26.8 4.2 0.27 6.5 NA NA 0.7 Weis Markets, Inc. WMK 52.21 96.5 1,302.4 27.9 6.6 0.48 7.4 NA NA 0.0 Whole Foods Market, Inc. WFM 56.29 85.8 19,951.6 35.8 9.6 1.54 16.2 13.8 11.8 0.0 $126.35 92.2% $363.5 9.9x NA Group Median 90.2% $7,154.8 24.2% 5.3% 0.38x 6.7x 6.4x 6.1x 1.6x Group Mean 89.1% $11,890.2 23.0% 5.6% 0.48x 8.1x 7.6x 7.3x 1.9x 6.9% Foodservice Distribution Core-Mark Holding Company, Inc. CORE 1.2% 0.12x 10.3x 7.5x 6.5x 0.8x Sysco Corporation SYY 36.05 83.1 23,775.2 17.5 5.5 0.53 9.6 9.4 8.8 1.3 The Chefs' Warehouse, Inc. CHEF 29.24 97.8 824.8 25.6 6.7 1.32 19.7 14.2 12.5 3.5 United Natural Foods, Inc. UNFI 74.95 97.5 3,971.7 16.9 3.8 0.63 16.5 13.9 12.1 1.1 Spartan Stores Inc. SPTN 23.85 96.2 1,051.7 21.0 4.0 0.40 9.9 9.4 NA 1.3 $75.43 98.5% $925.1 Group Median 97.5% $1,051.7 17.5% 4.0% 0.53x 10.3x 9.4x 10.5x 1.3x Group Mean 94.6% $6,109.7 17.6% 4.3% 0.60x 13.2x 10.9x 10.0x 1.6x Note: EV = Enterprise value equals market value plus total straight and convertible debt, preferred stock and minority interest, less cash and investments in unconsolidated subsidiaries. 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