Piper Jaffray Consumer M&A Weekly March 8, 2004 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 03/05/04 Pending Jays Foods Willis Stein & Partners NA $26.0 NA NA Food & Beverage Willis Stein has made a stalking horse bid for bankrupt Jay Foods 03/04/04 Pending Sealy Corp (1) KKR & Co. NA 1,500.0 $100.0 9.3x Consumer Products KKR to acquire bedding manufacturer Sealy Corporation 03/03/04 Pending 124 Kids R Us stores Office Depot NA 197.0 NA NA Retail Office Depot to acquire 124 Kids R Us stores 03/02/04 Pending Kama Foods Bunge Ltd. NA 21.3 NA NA Food & Beverage Bunge has agreed to acquire edible oil producer Kama Foods 03/02/04 Pending Quest Food Ingredients Kerry Group NA 440.0 NA NA Food & Beverage Kerry has agreed to buy Quest Food Ingredients from ICI Group 03/02/04 Pending Nu-Gro Thomas H. Lee NA 144.0 NA NA Consumer Products United Industries, owned by Thomas H. Lee, to acquire Nu-Gro 03/02/04 03/02/04 Vermont Pure Holdings Micropack Bottled Water NA NA NA NA Food & Beverage Micropack has acquired the retail operation of Vermont Pure 03/01/04 Pending Bess Eaton Donut Flour Co. Wendy's International NA NA NA NA Restaurant Wendy's to buy 48 stores of bankrupt Bess Eaton 03/01/04 03/01/04 Lincoln Snacks Company (1) Willis Stein & Partners NA 100.0 NA NA Food & Beverage Willis Stein & Partners has purchased of Lincoln Snacks 02/27/04 02/27/04 UniVogue Superior Uniform Group NA NA NA NA Apparel Superior Uniform Group to acquire privately-owned UniVogue (1) Source: The Deal. M&A Spotlight Transactions March 1, 2004 - Brynwood Partners to Sell Lincoln Snacks Company to Willis Stein & Partners All M&A Trans action Multiples Brynwood Partners, a private investment firm, announced Monday that it has completed the sale of Lincoln Snacks Company to Willis Stein & Partners, a Chicago-based private (LTM Data as of 12/31/03) equity investment firm with approximately $3 billion in assets under management. The financial terms of the transaction were not disclosed. Lincoln Snacks is a leading manufacturer of caramelized popcorn and nut based snacks under the well-known brand names PoppyCock®, PoppyCock®Just TheNuts™,Fiddle Faddle® and Screaming Yellow Zonkers®. Brynwood purchased a controlling interest in publicly held Lincoln in 1998 and subsequently took Lincoln private in October 2001. 15.0x 13.5x 13.2x 12.4x Willis Stein has partnered with Tim Healy, an experienced food and beverage industry executive, to acquire Lincoln Snacks and use it as a platform to build a leading snack food 13.0x 10.7x 10.7x company, both through organic growth and through the acquisition of complementary brands and product lines. Mr. Healy will be the company’s new Chairman and Chief 11.0x 9.7x Executive Officer and will work closely with Willis Stein to execute Lincoln Snacks’ growth strategy. The company is relocating its headquarters from Stamford, CT to Chicago, IL. 8.6x 9.0x 6.9x As part of the transaction, Hendrik J. Hartong III, the Lincoln Snacks President and Chief Executive Officer during Brynwood’s ownership, will be leaving the company. In 7.0x 6.0x addition, Brynwood will retain the Signature Snacks Company and the FLIPZ® candy-coated pretzel and graham cracker business after the sale of Lincoln Snacks to Willis Stein & 5.1x 5.0x Partners. FLIPZ® was acquired by Signature Snacks Company, a former wholly-owned subsidiary of Lincoln Snacks in June 2003 from Nestle USA. Mr. Hartong III will continue to oversee Signature Snacks, the makers of the FLIPZ® brand, and following the transition will join Brynwood Partners as a General Partner. David D. Clarke and other former 3.0x members of Lincoln Snacks’ management team will also remain with Signature Snacks which will continue to be based in Stamford, CT. < $25 $25 - $100 $100 - $250 $250 - $1,000 >$1,000 Transaction Size “We are delighted with the sale of Lincoln Snacks to Willis Stein,” said Mr. Hartong III. “Lincoln Snacks has become a major player in the snack food arena during the past six years, capturing the number one market share position in the ready-to-eat caramelized popcorn category. We look forward to working with Willis Stein on a smooth transition of EBIT EBITDA the Lincoln Snacks business.” “Willis Stein intends to build on the success Lincoln has enjoyed over the past six years through additional investment in new products, manufacturing capacity, and sales and marketing,“ commented Avy Stein, Managing Partner of Willis Stein. “Lincoln Snacks has exceptionally strong brands and truly differentiated products that really resonate with consumers. The Company is well-positioned for continued expansion and we are confident that Tim Healy and his senior management team will be successful in building on Lincoln Snacks’ already strong franchise with retailers and consumers.” Sawaya Segalas & Co., a leading consumer products investment banking firm, served as exclusive financial advisor to Lincoln Snacks and Brynwood Partners on this transaction. Willis Stein was advised by Mesirow Financial on the acquisition. Source: Company Press Release. Recent High Yield Debt and Convertible Securities Issued by Consumer Companies Announced Issued Company Issue Description Moody's / S&P Coupon Maturity Business Description 03/05/04 Not Priced Gold Kist Inc $200.0 mm HY notes (144a) B2 / B- 10.25% 2014 Marketer of farm commodities in processed and unprocessed forms 03/03/04 Not Priced True Temper Sports $125.0 mm HY notes (144a) B3 / B- 8.38% 2011 Manufacturer of manufactures golf shafts and bicycle tubing, forks, and seatposts 02/19/04 02/27/04 AMF Bowling Worldwide $150.0 mm HY notes (144a) B3 / CCC+ 10.00% 2010 Operator of bowling centers. Manufacturer/marketer of bowling products and billiard tables. 02/19/04 02/26/04 Jo-Ann Stores Inc $100.0 mm HY notes (144a) B2 / B- 7.50% 2012 Operator of a national chain of fabric and craft retail stores 02/13/04 02/19/04 Pantry Inc $250.0 mm HY notes (144a) B3 / B- 7.75% 2014 Operator of convenience stores in the southeastern United States 02/05/04 02/20/04 Pinnacle Foods $194.0 mm HY notes (144a) B3 / B 8.25% 2013 Manufacturer and marketer of branded food products 02/04/04 02/19/04 Playtex Products $460.0 mm HY notes (144a) B2 / B 8.00% 2011 Manufacturer and distributor of a diversified portfolio of consumer and personal products Source: Bloomberg, Public Press Piper Jaffray Consumer M&A Weekly March 8, 2004 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] The Private Equity/ LBO Sponsor Corner Date Target Financial Sponsor Summary of Transactionqppyg 03/05/04 Jays Foods LLC Willis Stein & Partners Willis Stein & Partners has made a stalking horse bid for the assets of Jays Foods, the maker of Jays potato chips 03/04/04 Sealy Corp KKR & Co. Kohlberg Kravis Roberts & Co to acquire Sealy Corporation, the world's largest manufacturer of bedding products 03/02/04 Nu-Gro Thomas H. Lee United Industries, a US maker of fertilizer, insecticides and weed killer owned by Thomas H. Lee Partners, has agreed to acquire rival Nu-Gro Corp. of Canada 03/01/04 Lincoln Snacks Company Willis Stein & Partners Willis Stein & Partners has completed the purchase of Lincoln Snacks Company from Brynwood Partners 02/20/04 Johnson Outdoors, Inc Management Buyout Billionaire Samuel Johnson and his daughter, CEO Helen Johnson-Leipold have offered to buyout the rest of Johnson Outdoors 02/19/04 Ellis Hosiery Mills Winston Partners Winston Partners announced their portfolio company, International Legwear Group, has purchased sock manufacturer Ellis Hosiery Mills 02/13/04 Piccadilly Cafeterias Piccadilly Investments Piccadilly Investments, owned by The Yucaipa Companies and Diversified Investment Management Group, has agreed to acquire bankrupt Piccadilly Cafeterias 02/12/04 Prestige Brands International GTCR Golder Rauner GTCR Golder Rauner acquired consumer products company Prestige Brands from New York-based MidOcean Partners 02/10/04 Medtech Holdings GTCR Golder Rauner GTCR Golder Rauner has acquired health and beauty care products company Medtech from San Francisco-based Shansby Group 02/09/04 Jane Cosmetics Brand Jane & Co. LLC (Buyout Group) Estee Lauder Cos. has sold its Jane brand to a newly formed company owned by Harry Adjmi and cosmetics executive Lisa Yarnell Private Equity/LBO Analytics SPREAD (LIBOR) FOR LEVERAGED BUYOUTS SENIOR BANK LOANS BUYOUT FUNDS RAISED By Deal Size $70 450 $63.3 $55.4 $60 400 363 406 344 ) $50 350 316 340 $36.9 306 353 $34.5 $34.5 334 $40 300 277 257 264 309 294 $30 $23.2 $24.0 250 $18.4 251 242 238 in Billions ($ $20 $17.0 $11.7 200 $5.3 $6.0 1996 1997 1998 1999 2000 2001 2002 2003 $10 $0 Less than $100 Million $100 Million to $250 Million 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Market Overview Close as of Weekly YTD LTM Equity Capital Markets Activity: 3/5/04 % Change (1) % Change % Change Last Week’s Activity NASDAQ 2,048 0.9 (0.4) 52.9 There were 20 transactions completed in the equity capital markets last week raising a combined $2.9 billion.