Food and Beverage Industry Update October 2014 Member FINRA/SIPC www.harriswilliams.com Food and Beverage Industry Update October 2014 What We’re Seeing CONTENTS Market Update INDUSTRY VITAL SIGNS M&A activity in the food and beverage sector remained strong through the end of the summer with several deals announced during the month of September. HW&Co. anticipates an active marketplace for EQUITY MARKET OVERVIEW the remainder of the year as strategic and private equity buyers continue to take advantage of current M&A MARKET OVERVIEW market conditions and aggressively pursue well positioned food & beverage companies. Over the past DEBT MARKET OVERVIEW month, the market saw notable activity from both strategic and private equity investors. On the strategic NOTABLE M&A ACTIVITY side, Ajinomoto North America acquired Windsor Foods, while sponsor investments included JAB PUBLIC COMPARABLES Holdings’ acquisition of Einstein Noah Restaurant Group. Activity also remained strong in the “better-for- you” segment, as WhiteWave Foods acquired So Delicious® Dairy Free, a producer of dairy-free frozen EARNINGS CALENDAR desserts, beverages, and creamers. GROUP OVERVIEW Harris Williams & Co. is a leading What We’ve Been Doing advisor to the food and beverage Closed HW&Co. Transactions market. Our significant experience covers a broad range of end markets, industries, and business models. This particular report has divested a portfolio company of a portfolio company of selected assets to focuses on trends and metrics in the a portfolio company of a portfolio company of following areas: has acquired has been acquired by has been acquired by has been acquired by and has been acquired by • Agribusiness and • Baked and Prepared Goods • Beverages • Branded and Private Label • Dairy a portfolio company of a portfolio company of • Distribution a portfolio company of a portfolio company of a portfolio company of • Ingredients has been acquired by • Meat and Protein has been acquired by has been acquired by has been acquired by has been acquired by has been acquired by • Natural and Organic • Processing • Produce • Restaurant and Retail What We’re Reading • Snacks JAB Increases Premium Consumer Holdings with Acquisition of Einstein Noah CONTACTS JAB Holdings is acquiring Einstein Noah Restaurant Group for approximately $470 million. Einstein Glenn Gurtcheff | Managing Director Noah’s investors will receive $20.25 a share, 51% above its closing price on September 26th. Through the [email protected] +1 (612) 359-2702 transaction, Einstein Noah seeks to revitalize its brand, enhance its national footprint, and solidify market leadership in the fresh-baked bagels industry. JAB Holdings has a distinguished track record of investing Tim Alexander | Managing Director in related consumer concepts, including Caribou Coffee and Peet’s Tea & Coffee. [email protected] Access to the full article here. +1 (612) 359-2716 WhiteWave Foods Broadens Plant-Based Platform with Purchase of So Delicious Ryan Budlong | Director [email protected] th On September 17 , The WhiteWave Foods Company announced its agreement to acquire So Delicious® +1 (415) 217-3409 Dairy Free from Wasserstein & Co. for approximately $195 million. The acquisition provides WhiteWave with further penetration of its core market of plant-based food and beverages, along with the #1 plant- Brant Cash | Vice President based frozen dessert brand in the US. Following the acquisition of Earthbound Farms, this transaction [email protected] +1 (612) 359-2709 marks WhiteWave’s second expansion in the non-GMO category. Access to the full article here. Ryan Freeman | Vice President [email protected] Ajinomoto Expands Frozen Foods Footprint With Purchase of Windsor Foods +1 (612) 359-2703 On September 10th, Ajinomoto North America, Inc. announced the acquisition of Windsor Foods for approximately $800 million. The acquisition will enable Ajinomoto to combine its global strength in food Matt Whebbe | Vice President [email protected] manufacturing with Windsor’s strong market position and distribution network throughout the US. +1 (612) 359-2727 Following the transaction, Ajinomoto will solidify its leading position in the Asian/Ethnic frozen foods category in the US. Like other Japanese firms, Ajinomoto is looking abroad as the domestic market www.harriswilliams.com shrinks due to an aging population and a slowing economy. Access to the investor presentation here. 2 of 16 Food and Beverage Industry Vital Signs 200 Commodity Crude Oil: Price Indices1 31.8% 150 Soybeans: 14.1% Wheat: 100 7.0% Corn: Commodity Price Index Commodity Price 0.5% 50 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Corn Soybeans Wheat Crude Oil Protein Price 140 2,3 Indices 130 Beef: 41.2% 120 Pork: 19.7% 110 Poultry: 100 11.7% ProteinPrice Index 90 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Beef Pork Poultry Restaurant and 140 Grocery Store 4 Restaurant: Sales Indices 120 20.2% Grocery: 17.3% 100 SalesIndex 80 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Restaurant Grocery Consumer Food 5.5 Price Index 4.0 Inflation2 2.5 Inflation(%) 1.0 -0.5 Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 3 of 16 Public Equity Market Overview Key Trading Stock Price % ChangeEV/EBITDA % Change Current Valuation Stats Net Debt / Statistics5 Industry and Segment 3 Month 1 Year 3 Month 1 Year Fwd PE LTM PE EV/EBITDA EBITDA Protein Processing 5.0% 38.8% (15.6%) (12.6%) 14.4x 14.5x 7.2x 1.9x Fruit and Vegetable 16.6% 9.7% 10.2% 15.1% 21.6x 23.5x 13.6x 3.0x Ingredients / Flavors (5.1%) 16.3% (7.2%) 4.6% 18.1x 26.7x 13.5x 1.1x Inputs Agribusiness (1.6%) 14.2% (9.9%) 26.4% 13.7x 15.1x 11.6x 1.1x Branded Processed Foods (5.1%) 7.1% 2.0% 3.0% 19.3x 23.2x 13.0x 2.2x Private Label Foods (2.8%) (7.9%) (8.8%) (12.2%) 20.1x 25.1x 13.4x 3.1x Natural / Organic Foods 3.5% 11.4% 3.7% 11.6% 23.5x 24.3x 14.7x 2.5x Baked Goods / Snack Foods (0.6%) 12.4% 2.6% 7.8% 21.8x 24.9x 11.9x 2.8x Dairy (1.8%) 9.1% 6.0% 21.7% 18.1x 22.7x 13.9x 2.2x Non-Alcoholic Beverages 2.1% 15.5% 0.8% 12.6% 20.1x 21.8x 13.7x 1.7x Food and Beverage Alcoholic Beverages (1.8%) 10.0% (6.2%) (1.0%) 19.4x 24.5x 12.6x 2.7x Food Retail (6.5%) (16.2%) (5.1%) (5.2%) 19.0x 17.9x 6.5x 2.3x Grocery Distribution (1.9%) (3.6%) 1.2% 18.5% 20.5x 26.4x 9.8x 1.9x Foodservice 0.1% (10.6%) 1.8% 19.9% 19.3x 25.5x 10.6x 3.3x Quick Service Restaurant (2.0%) 12.4% (1.0%) 3.6% 23.2x 29.4x 11.9x 2.6x Casual Dining Restaurant (11.4%) (0.6%) (12.6%) (6.9%) 19.4x 22.7x 10.5x 1.9x Fast Casual 8.3% 15.9% 2.4% 11.0% 38.2x 25.8x 12.0x 0.9x Pizza 0.5% 12.9% (3.2%) (0.6%) 22.7x 26.9x 14.4x 2.8x Beverage / Snack Retail 6.0% (2.3%) 4.9% (6.3%) 24.4x 31.7x 17.5x 1.7x Consumer Consumer and Retail Family Restaurant 0.9% (2.6%) 6.2% 9.6% 20.7x 20.1x 9.7x 2.1x Overall Median (1.5%) 8.3% (1.4%) 5.9% 20.1x 23.4x 11.8x 2.1x Public Protein Processing Company Ingredients / Flavors Sector Fast Casual 5 Performance Non-Alcoholic Beverages (One year change in stock price) S&P Agribusiness Pizza Quick Service Restaurant Baked Goods / Snack Foods Natural / Organic Foods Alcoholic Beverages Fruit and Vegetable Dairy Branded Processed Foods Casual Dining Restaurant Beverage / Snack Retail Family Restaurant Grocery Distribution Private Label Foods Foodservice Food Retail -25.0% -12.5% 0.0% 12.5% 25.0% 37.5% 50.0% Inputs Food and Beverage Consumer and Retail 4 of 16 Public Equity Market Overview Recent Equity Gross Offerings6 Close Transaction Proceeds Date Filing Date Issuer Ticker Type ($mm) Use of Funds 09/11/14 06/16/14 Inventure Foods Inc SNAK Follow-On $46.2 Secondary 09/09/14 09/09/14 Performance Food Group Co - IPO $100.0 Secondary General Corp. Purp. 09/08/14 09/08/14 Pinnacle Foods Inc PF Follow-On $484.5 General Corp. Purp. 08/04/14 08/04/14 Youngevity International Inc YGYI Convertible $4.4 General Corp. Purp. 07/30/14 07/30/14 Tyson Foods Inc TSN Convertible $1,500.0 Acquisition Fin. Pay Fees & Expenses 07/30/14 07/30/14 Tyson Foods Inc TSN Follow-On $900.0 Acquisition Fin. Pay Fees & Expenses 07/28/14 07/28/14 Avidus Management Group Inc AVD Follow-On $0.7 Future Acquisitions General Corp. Purp. 07/18/14 07/18/14 United Natural Foods Inc UNFI Follow-On $7.0 Secondary 07/17/14 07/17/14 TreeHouse Foods Inc THS Follow-On $373.8 Future Acquisitions Pay Fees & Expenses 06/20/14 06/20/14 RiceBran Technologies RBIT Follow-On $7.5 Working Capital Paymnt on Borrowings 06/12/14 06/12/14 Russell Breweries Inc RB Follow-On $0.5 Working Capital Investment/Loan 06/02/14 06/02/14 Captiva Verde Industries Ltd VEG.H Follow-On $0.5 Working Capital 05/30/14 05/30/14 MamaMancini's Holdings Inc MMMB Follow-On $2.4 General Corp.