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www.harriswilliams.com
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
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www.harriswilliams.com
WHAT WE’RE SEEING
1
CONTENTS
INDUSTRY VITAL SIGNS
EQUITY MARKET OVERVIEW
M&A MARKET OVERVIEW
DEBT MARKET OVERVIEW
RECENT M&A ACTIVITY
EARNINGS CALENDAR
GROUP OVERVIEW
Harris Williams & Co. is a leading advisor to the food and beverage market. Our significant experience covers a broad range of end markets, industries, and business models. This particular report focuses on trends and metrics in the following areas:
WHY THE ARCTIC APPLE MEANS YOU MAY BE SEEING MORE GMOS AT THE STORE
In a bid to combat food waste, the Grocery Manufacturers Association and the Food Marketing Institute are teamingup, advising companies to abolish their “Expires On” and “Sell By” labels. According to the groups, the labels promptover-cautious consumers to throw away perfectly good, though less fresh, food.
Access the full article here.
FOR FOOD MANUFACTURERS, 'SELL BY' LABELS MAY HAVE REACHED THEIR EXPIRATION DATE
MILLIONS TO FIGHT FOOD INDUSTRY SWAY, FROM A SNACK BAR CEO
The Arctic Apple, a genetically modified Golden Delicious, is set to hit test markets as the first apple of its kind inhistory. It is the latest target in a transformative shift that has led scientists to shift from “transgenic” crops that includeforeign DNA to “cisgenic” crops that are altered using their own genome, bucking many existing GMO regulatoryhurdles.
Access the full article here.
With a $25 million pledge, Daniel Lubetzky, the CEO of KIND, has vowed to create a group dedicated to revealcorporate influence in the nutrition field with activities such as education campaigns and investigative journalism. Themove comes as the division between traditional “Big Food” and newer, better-for-you businesses continues to widen.
($ in millions, except per share data) Ticker 2/12/17 52-wk High Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple Revenue EBITDA Revenue EBITDA
Mean 8.1% 2.4% 37.5% 13.2% 28.7x 1.39x 9.9x 1.51x 11.5x
Median 2.6% 0.6% 32.0% 11.9% 27.8x 1.11x 9.3x 1.33x 11.3x
LTM EV / LTM EV / 2016ERevenue Growth LTM Margins
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PUBLIC COMPARABLES5
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
Price at As a % of Market Enterprise P/E
($ in millions, except per share data) Ticker 2/12/17 52-wk High Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple Revenue EBITDA Revenue EBITDA
Mean 0.9% 2.8% 31.5% 12.5% 29.8x 2.04x 15.1x 2.00x 17.4x
Median (2.9%) 5.2% 33.5% 14.1% 27.7x 2.34x 14.8x 2.23x 16.1x
EV / 2016ELTM MarginsLTM EV / LTMRevenue Growth
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PUBLIC COMPARABLES5
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
Price at As a % of Market Enterprise P/E
($ in millions, except per share data) Ticker 2/12/17 52-wk High Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple Revenue EBITDA Revenue EBITDA
United Natural Foods, Inc. UNFI 45.65 87.5% 2,309 2,890 8,672 304 4.9% 11.5% 15.3% 3.5% 18.4x 0.33x 9.5x 0.33x 9.3x
Mean 5.2% 15.2% 11.0% 2.3% 21.1x 0.20x 9.5x 0.23x 9.0x
Median 6.1% 8.8% 13.0% 2.2% 21.3x 0.22x 9.0x 0.23x 9.3x
EV / 2016ELTM Revenue Growth EV / LTMLTM Margins
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PUBLIC COMPARABLES5
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
Price at As a % of Market Enterprise P/E
($ in millions, except per share data) Ticker 2/12/17 52-wk High Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple Revenue EBITDA Revenue EBITDA
Mean 12.2% 13.2% 20.8% 13.4% 38.9x 2.87x 16.3x 2.76x 13.6x
Median 8.4% 10.1% 15.7% 11.7% 37.7x 1.68x 13.2x 1.64x 11.0x
LTM Revenue Growth LTM Margins EV / LTM EV / 2016E
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PUBLIC COMPARABLES5
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
Price at As a % of Market Enterprise P/E
($ in millions, except per share data) Ticker 2/12/17 52-wk High Cap Value Revenue EBITDA 1 Year 3 Years Gross EBITDA Multiple Revenue EBITDA Revenue EBITDA
Luby's, Inc. LUB 3.61 70.8% 105 143 396 15 (7.4%) (0.2%) 6.8% 3.7% NA 0.36x 9.8x NA NA
Mean (1.5%) 0.6% 15.9% 9.9% 43.0x 1.31x 12.5x 1.62x 11.2x
Median (0.3%) 1.2% 14.6% 11.1% 52.2x 1.30x 11.8x 1.43x 11.3x
LTM Revenue Growth LTM Margins EV / LTM EV / 2016E
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PUBLIC EQUITY MARKET OVERVIEW
10
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
FOOD AND BEVERAGE INDUSTRY STOCK PERFORMANCE5
Highlighted Food and Beverage M&A Transactions5
M&A MARKET OVERVIEW
RLJ EQUITY PARTNERS AND SJ PARTNERS TO ACQUIRE NATIVE MAIN PRODUCE AND SPECIALTY FOODS
Enterprise Value: NDRevenue Multiple: NDEBITDA Multiple: NDAnnounced: January 24, 2017
GOLDEN GATE CAPITAL TO ACQUIRE BOB EVANS RESTAURANTS
SOVOS BRANDS TO ACQUIRE MICHAEL ANGELO’S GOURMET FOODS
Sovos Brands, a new company formed by private equity owner Advent International, has agreed to acquire Michael Angelo’s Gourmet Foods for an undisclosed amount.
Michael Angelo’s Gourmet Foods is a leading producer of premium, authentic frozen Italian entrees.
The acquisition is the first investment made by Sovos Brands, a new food and beverage company focused on acquiring and building one-of-a-kind consumer packaged goods businesses under a single platform.
RLJ Equity Partners and SJ Partners have agreed to acquire Native Maine Produce and Specialty Foods for an undisclosed amount.
Native Maine is a wholesale distributor of fresh produce, dairy, and specialty foods for the foodservice channel.
RLJ Equity Partners and SJ Partners aim to accelerate Native Maine’s growth with its operating partner expertise and capital resources.
80
90
100
110
120
130
140
Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17
Restaurant Natural/Organic Beverage
Private Label Food Manufacturing Protein Processing/Dairy S&P 500
Enterprise Value: NDRevenue Multiple: NDEBITDA Multiple: NDAnnounced: February 1, 2017
25.1%
24.8%
15.05%
13.1%
11.5%
10.0%
Golden Gate Capital has agreed to acquire Bob Evans Restaurants from Bob Evans Farms.
Bob Evans Restaurants is an American national chain of restaurants with 522 locations across the United States.
The transaction will allow Bob Evans Farms to focus exclusively on its food business, while Golden Gate Capital can partner with Bob Evans Restaurants to maximize growth.
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M&A MARKET OVERVIEW*
11
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
Food and Beverage M&A Trends5
MEDIAN FOOD & BEV. TRANSACTION MULTIPLES
PRIVATE EQUITY INVESTMENTS & EXITS
Latest Deals and Announced Private Equity Activity5
LAST 10 DEALS ANNOUNCED
ANNOUNCED FOOD & BEV. TRANSACTIONS
* M&A transactions include European and cross-border deals since 2015.
8.8x 8.3x 8.0x
11.3x
9.2x
9.7x
8.8x
10.0x 9.5x
0.00x
0.40x
0.80x
1.20x
1.60x
2.00x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
2009 2010 2011 2012 2013 2014 2015 2016 2017
YTD
EV
/ LTM
Sa
les M
ultip
le
EV
/ L
TM E
BIT
DA
Mu
ltip
le
EV / LTM EBITDA EV / LTM Sales
$9.3
$67.2
$8.2$24.0
$55.7
$120.7
$247.7
$51.8
$2.4
0
100
200
300
400
500
600
700
$0
$40
$80
$120
$160
$200
$240
$280
2009 2010 2011 2012 2013 2014 2015 2016 2017
YTD
Nu
mb
er o
f Tran
sa
ctio
ns
Ag
gre
ga
te
D
ea
l V
alu
e (
$ in
billio
ns)
Aggregate Deal Value # of Deals
14
3225 26
3831
65
110
2917
34
18
3643
48
6560
16
0
20
40
60
80
100
120
2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Nu
mb
er
of
Tra
nsa
cti
on
s
Number of Investments Number of Exits
Announced Target Buyer1/0/1900 0 Cargill, Incorporated
2/9/2017 Ruggeri & C. SpA Rotkäppchen-Mumm Sektkellereien
2/9/2017 Diamant Nahrungsmittel GmbH Puratos NV
2/9/2017 02 Breathe LLC Elev8 Brands, Inc.
2/9/2017 Grozette BV Vandersterre Groep Bedrijven BV
2/8/2017 Lyaxovichsky Molochny Zavod COAO B.S.A. International SA (Belgium)
2/8/2017 Coca-Cola Southwest Beverages LLC AC Bebidas S de RL de CV
2/7/2017 Sema E SASU BNP Paribas Développement SA
2/7/2017 Nest lé Waters Deutschland GmbH HANSA-HEEMAN AG
2/7/2017 PS Bageri AB Lantmännen Unibake Danmark A/S
2/6/2017 Body & Fit Sportsnutrit ion BV Glanbia Plc
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L + 0
L + 200
L + 400
L + 600
L + 800
L + 1000
Av
era
ge
Sp
rea
d O
ve
r LI
BO
R
$0
$2
$4
$6
$8
$10
$12
$14
$16
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16
Loa
n V
olu
me
by
Qu
art
er
($ in
bill
ion
s)
Inst itutional Pro Rata
Effective Date Borrower Name Description Tranche Amount Type Rating Spread
02/13/17 Give & Go Prepared Foods Cookies and crackers 50 USD Term Loan B N/A 550 BPS
02/03/17 Milk Specialties Global Food preparations 474 USD Term Loan B N/A 400 BPS
Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities.Our clients benefit from our deep-sector experience, integrated industry intelligence andcollaboration across the firm, and our commitment to learning what makes them unique. For moreinformation, visit our website at www.harriswilliams.com/industries.
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HARRIS WILLIAMS & CO.
1. IMF
2. U.S. Bureau of Labor Statistics
3. Unweighted Average
4. U.S. Census Bureau
5. Factset
6. Thomson Financial
7. S&P
8. Reuters
SOURCES
FOOD AND BEVERAGE
INDUSTRY UPDATE │ FEBRUARY 2017
DISCLOSURES
17
Harris Williams & Co. (www.harriswilliams.com) is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services.
Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 7078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.
THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US.
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