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US Bancorp Piper Jaffray's Consumer Mergers & Acquisitions Group Acted As Financial Advisor in the Sale of VICORP Restaurants and Chevys Inc

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US Bancorp Piper Jaffray's Consumer Mergers & Acquisitions Group Acted As Financial Advisor in the Sale of VICORP Restaurants and Chevys Inc U.S. Bancorp Piper Jaffray Consumer M&A Weekly September 15, 2003 Consumer Mergers & Acquisitions David Jacquin - Managing Director, Group Head, 415-277-1505, [email protected] Scott LaRue - Managing Director, 650-838-1407, [email protected] Tom Halverson - Principal, 612-303-6371, [email protected] John Twichell - Vice President 415-277-1533, [email protected] John Barrymore - Vice President, 415-277-1501, [email protected] Robert Arnold - Associate, 415-277-1548, [email protected] Selected Consumer M&A Transactions (Approximate valuations, $ in millions) Date Equity Enterprise LTM EV / LTM Announced Effective Target Acquiror Value Value EBITDA EBITDA Universe Comments 09/12/03 Pending Elder-Beerman Corp. Goldner Hawn (GHJM) (1) $90.3 $200.4 $34.3 5.8x Retail Wright Holdings, formed by GHJM, ups its offer to take retailer private 09/12/03 Pending IGT OnLine Entertainment Systems Scientific Games Corporation (2) NA 143.0 NA NA Leisure & Entertainment Scientific Games to acquire on-line lottery system 09/12/03 Pending Farmland Foods pork business Cargill (3) NA 363.5 NA NA Food & Beverage Cargill bids on pork processing unit, topping Smithfield's "stalking horse" bid 09/10/03 Pending Foreign Candy Co. Topps Co. NA NA NA NA Consumer Products Trading cards company to acquire some assets of privately held Foreign Candy 09/10/03 Pending Unilever's oral care brands Church & Dwight (4) NA 104.0 NA NA Consumer Products Unilever sells oral care brands in the U.S. and Canada to Church & Dwight 09/09/03 09/09/03 King's animal health division Virbac Corp. (5) NA 15.1 NA NA Pet Products Virbac Corp. buys animal health line from Tenn.-based King Pharmaceuticals 09/08/03 Pending C&S Midwest operations Supervalu Inc (# >) (6) NA NA NA NA Food & Beverage Supervalu and C&S announced an asset exchange agreement 09/08/03 Pending Water Island Inc. Glacier Water Services Inc. 5.9 NA NA NA Food & Beverage Glacier Water Services to acquire privately held, Indianapolis-based Water Island 09/08/03 09/08/03 Fox's Confectionery Big Bear (Mgmt buy-in team) (7) 11.2 15.0 NA NA Food & Beverage Big Bear Ltd., a management buy-in team, purchases Fox's Confectionery 09/05/03 Pending Alpha Shirt Co. Broder Bros. Co. (8) NA 230.0 NA NA Apparel Broder Bros. to acquire Alpha Shirt from buyout firm Linsalata Capital Partners 09/04/03 Pending Orion's Cosmetics Unit CapMan plc (9) NA 108.0 NA NA Consumer Products Finnish private equity firm CapMan agrees to buy the cosmetics unit of Orion 09/04/03 Pending Suntory U.S. Water Unit Groupe Danone (10) NA NA NA NA Food & Beverage Suntory and Danone formed a JV between their US water-delivery businesses 09/04/03 Pending Maui Fresh Intl. Calavo Growers Inc (11) NA 4.5 NA NA Food & Beverage California distributor of avocados agrees to buy counterpart Maui Fresh 06/30/03 09/04/03 Top-Flite Golf Co. Callaway Golf Co. 169.3 173.3 NM NM Consumer Products Callaway beat out German rival Adidas in competitive auction 09/03/03 Pending TDK Mediactive Take-Two Interactive (# > +) 12.8 22.7 1.3 NM Leisure & Entertainment Video gamemaker to acquire gaming publisher TDK Mediactive 09/03/03 09/03/03 Attwood Corp. Brunswick Corp. NA 47.9 NA NA Consumer Products Boating and billiard equipment maker acquires subsidiary of Steelcase 09/02/03 Pending J.H. Harvey Co. Delhaize Group NA 26.1 NA NA Food & Beverage Belgian food retailer Delhaize to acquire Nashville-based supermarket chain 09/02/03 Pending Unilever's Brut brand Helen of Troy NA 54.0 NA NA Consumer Products Helen of Troy purchases rights to sell the Brut line of products in the West (1) Assumes 11.58 million shares outstanding per recent SEC 10Q filing (basic shares) at $7.80 offer price and net debt of $110.1 million. (7) Based on U.S. to British exchange ratio of 1.596. Big Bear Ltd. is a management buy-in team led by Paul Wilkinson (former head of RHM) and (2) The acquisition, which is expected to be completed during the fourth quarter, includes IGT OnLine's Advanced Gaming System video lottery system contracts, certain intellectual property, John Jackson (ex-deputy chairman of Hillsdown Holdings). Assumes net debt of 3.8 million - The Guardian. and an exclusive license to certain of IGT's slot brands for instant and on-line lottery games. IGT OnLine has annual revenues of approximately $140 million. - Bloomberg. (8) Broder Bros. and Alpha Shirt generated revenues of $430 million and $409 million, respectively, in FY 2002 -The Daily Deal. (3) Farmland foods is the sixth-largest U.S. pork producer with annual sales of $1.8 billion. Parent company, Farmland Industries, once the nations largest farmer-owned cooperative, filed for Chapter 11 (9) Enterprise value based on a U.S. to Euro exchange ratio of 1.08. The cosmetics unit generated revenues of $146.1 million in 2002. bankruptcy in May 2002. The Company has been selling its assets to pay off debt. The pork unit is its largest reaming asset. (10) Suntory Ltd. and Groupe Danone have agreed to form a joint venture creating the largest water-delivery buiness in the U.S. (4) Unilever will receive an additional performance-based cash payment of between $5-$12 million. Sales of the oral care brands were $61 million for the first 6 months of 2003. Suntory has an option after 3 years to sell its 50% stake in the water venture to Danone. (5) Transaction includes inventories, manufacturing equipment and intellectual property. King's animal health products division generated revenues of $5.7 million in 2002. (11) All stock deal. Maui Fresh had approximately $20 million in revenue for the year ended 12/31/02 -The Daily Deal. (6) The transaction is an asset exchange whereby Supervalu will acquire former Fleming Midwest operations from C&S, and in exchange, C&S will acquire Supervalu's New Engalnd operations. The transaction is expected to close by mid-September 2003. M&A Spotlight Transactions Private equity firms hungry for food companies this summer Private equity firms feasted on food companies during the summer of 2003, and the food-buying binge is expected to continue into the fall. Already this summer buyout shops have bought or sold All M&A Trans action Multiple s brands such as Bumble Bee Tuna, Duncan Hines, Eight O'Clock Coffee, Lenders Bagels, Swanson Dinners and Vlasic Pickles. And plenty more food businesses remain on the auction block, (LTM Data as of 6/30/03) including Michael Foods Inc., Bakery Chef, Aurora Foods Inc., Russell Stover Candies Inc., Jays Foods LLC, Findus AB and Nonni's Food Co. Minnetonka, Minn.-based egg processor and distributor Michael Foods is owned by New York's Vestar Capital Partners and co-investor Goldner Hawn Johnson & Morrison Inc., who hope to harvest about $1 billion for their portfolio company. Michael Foods generates about two-thirds of its revenue buying eggs and then selling them as hard-cooked and soft-cooked eggs, egg whites and other egg products. Vestar and Goldner Hawn took the company private for $820 million, equal to less than a 6 times trailing Ebitda multiple, in 2001 after an acquisition offer from ConAgra Foods Inc. ( # > =) fell through. Having improved operations and introduced new products into Michael's pipelines to boost sales, Michael's owners are looking to sell the company for as much as 8 times 15.0x 14.4x its $150 million in Ebitda, or $1.2 billion. Since there is no obvious strategic buyer for the company, the Banc of America Securities LLC-run auction is loaded with possible private equity bidders including Blackstone Group, J.W. Childs 13.0x 11.6x Associates LP, Investcorp, Kohlberg Kravis Roberts & Co., Madison Dearborn Partners LLC, Thomas H. Lee Partners, and Texas Pacific Group. 10.7x 11.0x 10.0x Another buyout shop focusing in on the food sector is J.P. Morgan Partners, which along with its new partner C. Dean Metropoulos recently bought Pinnacle Foods, the maker of Swanson frozen 8.9x foods and Vlasic pickles, for $485 million. The two are reportedly looking to purchase Westmont, Ill.-based Bakery Chef and St. Louis-based Aurora Foods Inc. as well. Currently owned by Wind 8.4x 9.0x Point Partners, Bakery Chef, which generates about 65% of its sales supplying breakfast products to McDonald's (# > =), makes frozen and ready-to-bake biscuits, frozen hotcakes, frozen waffles, 7.6x 8.3x muffins and table breads. The deadline for first-round preliminary offers in the Goldman, Sachs & Co.-run auction was Aug. 26 with a winner likely to be chosen in October. J.P. Morgan Partners is 6.3x also vying for Aurora Foods, the maker of Duncan Hines cakes and Aunt Jemima breakfast products. The two are in day-to-day negotiations sources said, but there is a stumbling block. In July, 7.0x Aurora agreed to sell itself to J.W. Childs in a prenegotiated bankruptcy plan that values the company at $925 million and gives the private equity firm a majority stake in Aurora for a $200 million equity investment. However, since Aurora's lenders haven't approved the J.W. Childs-sponsored plan and the company has not yet filed for bankruptcy,J.P.Morganistryingtomakeamoreenticing 5.0x 4.2x offer for Aurora, sources said. -Source: The Daily Deal September 3, 2003 Other News in the Consumer Market 3.0x < $25 $25 - $100 $100 - $250 $250 - $1,000 >$1,000 TRC Capital Corp.
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