BOSTON CHICAGO LONDON LOS ANGELES PHILADELPHIA SAN DIEGO SILICON VALLEY TAMPA Q2 2015 FOOD & BEVERAGE CONTACTS Thomas Elliott Managing Director (813) 251-7285 [email protected]Shawn Keenan Vice President (813) 251-7299 [email protected]Daniel Schultz Director of Business Development (617) 619-3368 [email protected]MERGER & ACQUISITION ACTIVITY 2014 proved to be one of the strongest years on record for mergers and acquisitions in the food & beverage industry. Reflective of economic conditions, the industry witnessed increasing activity almost every year since the recession. The one exception was 2013, during which the number of transactions declined, a result of the capital gains tax increase in January of that year. Activity rebounded in 2014, posting a 14% increase to 305 transactions. This activity reflects the strong interest in food & beverage businesses, making them attractive acquisition targets with the ability to draw healthy valuations. 2015 OUTLOOK M&A activity in the food & beverage industry is off to a strong start in 2015, with 94 transactions reported midway through Q2. The industry has consistently grown year over year, even during challenging economic times, and as a result buyers and investors are attracted to the resiliency of the sector. Capstone expects robust activity in the industry to persist in the near-term, with middle market deals driven by eager, well-capitalized buyers backed by a growing economy. We expect that 2015 will yield strong opportunities for privately held middle market companies. In fact, the M&A cycle appears to be entering its “boom” phase, during which activity – and valuation premiums – typically rise sharply, resulting in a very attractive seller’s market. 223 267 309 260 210 261 283 300 268 305 94 0 50 100 150 200 250 300 350 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q2 2015 Food & Beverage Transactions Source: Capital IQ Transactions in the U.S. or Canada
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BOSTON
CHICAGO
LONDON
LOS ANGELES
PHILADELPHIA
SAN DIEGO
SILICON VALLEY
TAMPA
Q2 2015 FOOD & BEVERAGE
CONTACTS Thomas Elliott Managing Director (813) 251-7285 [email protected] Shawn Keenan Vice President (813) 251-7299 [email protected] Daniel Schultz Director of Business Development (617) 619-3368 [email protected]
MERGER & ACQUISITION ACTIVITY
2014 proved to be one of the strongest years on record for mergers and acquisitions in the food
& beverage industry. Reflective of economic conditions, the industry witnessed increasing
activity almost every year since the recession. The one exception was 2013, during which the
number of transactions declined, a result of the capital gains tax increase in January of that year.
Activity rebounded in 2014, posting a 14% increase to 305 transactions. This activity reflects the
strong interest in food & beverage businesses, making them attractive acquisition targets with
the ability to draw healthy valuations.
2015 OUTLOOK
M&A activity in the food & beverage industry is off to a strong start in 2015, with 94 transactions
reported midway through Q2. The industry has consistently grown year over year, even during
challenging economic times, and as a result buyers and investors are attracted to the resiliency of
the sector.
Capstone expects robust activity in the industry to persist in the near-term, with middle market
deals driven by eager, well-capitalized buyers backed by a growing economy. We expect that
2015 will yield strong opportunities for privately held middle market companies. In fact, the
M&A cycle appears to be entering its “boom” phase, during which activity – and valuation
premiums – typically rise sharply, resulting in a very attractive seller’s market.
07/31/14 Leo's Foods Wise Foods Produces corn and flour tortillas for the food service, retail and private label markets.
- - -
07/31/14 Faribault Foods Arizona Canning Company
Produces and supplies beans, soups, beverages, pastas and vegetables.
- - -
07/29/14 Flagstone Foods Bay Valley Foods Purchases, prepares, packages, distributes and sells private label healthy snacks in North America.
$875.0 1.2x 16.1x
07/14/14 All Market Reignwood Group Produces and supplies coconut water in the United States.
$664.0 - -
07/04/14 Apple & Eve Lassonde Industries Produces and markets natural fruit juices. $147.9 0.9x 10.8x
07/01/14 Truco Enterprises Insignia Capital Group
Provides Southwestern Mexican Style snacks and drink mixes in the United States.
- - -
07/01/14 Pacific Northwest Kale Chips Company
Made In Nature Manufactures kale chips. - - -
07/01/14 Quincy Street Indiana Packers Corporation
Produces and markets pork products. - - -
06/30/14 Conopco Mizkan Holdings Comprises two pasta sauce brands, Ragu and Bertolli and associated production facilities.
$2,150.0 3.6x -
06/30/14 Vegetable Juices Naturex Société Anonyme
Processes, produces and markets vegetable juice blends and natural vegetable flavors and ingredients.
- - -
06/30/14 S-L Snacks Shearer's Foods Comprises a cookies and crackers brand and two manufacturing facilities.
$430.0 - -
06/27/14 Clement Pappas & Co. Lassonde Industries Processes cranberry sauces and beverages including a line of organic products primarily for private label.
$185.0 - -
06/02/14 MFI Holding Corporation
Post Holdings Processes and distributes food products in the United States and internationally.
Imports and produces food products for sale in supermarkets and retailers.
$16.6 0.6x -
04/02/14 Pineridge Bakery ARYZTA AG Produces and markets frozen and fresh specialty baked goods.
$340.0 1.6x -
04/01/14 Cooperstown Brewing Company
Northern Eagle Beverages
Brews premium ales, porters and stouts. - - -
03/12/14 Simply Omega Function-O Foods Produces beef products that are naturally rich with Omega-3 fatty acids.
- - -
02/25/14 Lettieri's Greencore Group Manufactures cooked and merchandised food products. $37.7 1.0x 8.1x
02/24/14 CitraSource Frutarom USA Provides citrus products to flavor and ingredient companies.
$7.5 1.1x -
02/14/14 Head Country Gladstone Investment Corporation
Manufactures and markets barbeque sauces, seasonings and marinades.
- - -
02/11/14 The Switch Beverage Company
Apple & Eve Manufactures and markets carbonated juices. - - -
02/07/14 Corn Flour Producers Bunge North America Produces corn flours for the production of tortillas, chips, shells, tamales and other food products.
$12.0 - -
02/01/14 Golden Boy Foods Post Holdings Produces and markets food products. $300.6 - -
LTM = last twelve months; EV = enterprise value Sources: Capstone Partners LLC research; Capital IQ; public filings and press releases
Capstone Partners’ bankers have completed several transactions within the consumer products space. These transactions
span the major categories of manufacturing, contract manufacturing, retail and wholesale and include a variety of
companies offering a diversity of products such as food & beverage items, tobacco, pet products, juvenile products, drugs
and neutraceuticals, and recreation products. Capstone’s experience in the sector provides us with insight into the
valuable attributes and likely valuation of a target company, the active buyers in the industry and the nuances of