Industry Insights: Q4 2019 Food & Beverage Contents Industry Overview………...…….….………….. Transaction Activity………………………….. Transaction Multiples…....…...….….………Public Company Comparable Analysis…Active Buyers…...…………………….……Precedent Transactions Analysis…….……Industry Overview Number of Closed Transactions 1,2 Food and beverage companies are increasingly looking to the middle market in order to acquire smaller, niche brands and products to keep up with changing consumer preferences and remain relevant. During the fourth quarter of 2019, there were 114 M&A transactions within the food and beverage industry that closed. Food products led in terms of transaction volume (55), transacting at an average EV/EBITDA multiple of 9.2x. Looking at the LTM performance of the food and beverage industry relative to the S&P 500, only the food distributors segment, which returned 37.9%, outperforming the S&P 500, which returned 28.5%. Within the food and beverage industry, M&A is increasingly driven by the need for market disruption, rather than market share. Staying relevant to the consumer is becoming the biggest challenge. As consumer preferences continue to trend towards new and healthy products, strategic and financial buyers are responding by acquiring newer, smaller, niche brands and products, and are willing to pay a premium to compete with other potential buyers and avoid being left at the altar. The beverage sector continues to be an active space for M&A, with premiumization, in-part, driving sector sales. Despite flat-to-down per capita consumption, consumers’ tastes are moving towards higher priced beverages. Transactions in the alcoholic beverage sector are predominantly focused on small, private craft brewers, with the occasional large transaction, such as the acquisitions of Greene King plc. The strong activity in the non-alcoholic beverage sector is supported by tailwinds from cannabis-infused beverages, in addition to those from other specialty and craft-style drinks like kombucha, natural tea and cold brew coffee. Both strategic and financial buyers have delved into venture capital-type funding of growth equity investments to nurture growing brands, presumably as a precursor to eventual acquisitions. The market witnessed three multi-billion-dollar transactions in the fourth quarter of 2019: the acquisition of Greene King plc by CK Asset Holdings Limited (SEHK:1113) for $6.1 billion; the acquisition of Arnott's Biscuits Holdings, Campbell Hong Kong and Related Business of Campbell Soup Company by KKR & Co. Inc. (NYSE:KKR) for $2.2 billion; and the acquisition of Reinhart FoodService L.L.C. and Associated Real Estate Companies by Performance Food Group Company (NYSE:PFGC) for $2 billion. Additionally, a few notable transactions were announced: the acquisition of the U.S. Ice Cream Business of Nestlé S.A. by Froneri International Limited for $4 billion; the acquisition of China Agri- Industries Holdings Limited (SEHK:606) by COFCO (Hong Kong) Limited for $1.2 billion; the acquisition of the Wine and Spirits Portfolio of Constellation Brands, Inc. by E. & J. Gallo Winery, Inc. for $1.1 billion; and the acquisition of Craft Brew Alliance, Inc. (NasdaqGS:BREW) by Anheuser-Busch Companies, LLC for $288 million. From an M&A perspective, the food and beverage sector will continue to be highly active as new entrants seek growth capital and mature conglomerates seek to diversify their portfolio of legacy brands with high-growth, specialty assets. Following years of aggressive cost-cutting and a focus on boosting margins, companies are paying more attention to spending in order to reignite growth and keep their brands competitive. The focus going forward will likely be on smaller deals that give scale, entrance into new markets or faster-growing categories to complement their existing portfolios. While strategic buyers still lead in terms of acquisitions within the food and beverage space, financial buyers are increasingly active due to the industry’s relative resistance to economic downturn. Total Transaction Value ($bn) 1 Transaction EV/EBITDA Multiples 1 1 4 5 6 7 8 1 Source(s): S&P Capital IQ, Pitchbook 2 Number of closed transactions only include transactions with disclosed transaction values. Quarterly Performance 210 159 131 125 114 148 0 50 100 150 200 250 18Q4 19Q1 19Q2 19Q3 19Q4 Average $31.0 $20.3 $13.3 $21.1 $25.1 $22.2 $0 $5 $10 $15 $20 $25 $30 $35 18Q4 19Q1 19Q2 19Q3 19Q4 Average 10.7x 12.0x 13.8x 9.1x 9.7x 11.0x 0.0x 3.0x 6.0x 9.0x 12.0x 15.0x 18Q4 19Q1 19Q2 19Q3 19Q4 Average
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Industry Insights: Q4 2019 Food & Beverage
Contents Industry Overview………...…….….………….. Transaction Activity………………………….. Transaction Multiples…....…...….….……….... Public Company Comparable Analysis…....... Active Buyers…...…………………….……...... Precedent Transactions Analysis…….……....
Industry Overview
Number of Closed Transactions1,2
Food and beverage companies are increasingly looking to the middle market in order to acquire smaller, niche brands and products to keep up with changing consumer preferences and remain relevant. During the fourth quarter of 2019, there were 114 M&A transactions within the food and beverage industry that closed. Food products led in terms of transaction volume (55), transacting at an average EV/EBITDA multiple of 9.2x. Looking at the LTM performance of the food and beverage industry relative to the S&P 500, only the food distributors segment, which returned 37.9%, outperforming the S&P 500, which returned 28.5%. Within the food and beverage industry, M&A is increasingly driven by the need for market disruption, rather than market share. Staying relevant to the consumer is becoming the biggest challenge. As consumer preferences continue to trend towards new and healthy products, strategic and financial buyers are responding by acquiring newer, smaller, niche brands and products, and are willing to pay a premium to compete with other potential buyers and avoid being left at the altar. The beverage sector continues to be an active space for M&A, with premiumization, in-part, driving sector sales. Despite flat-to-down per capita consumption, consumers’ tastes are moving towards higher priced beverages. Transactions in the alcoholic beverage sector are predominantly focused on small, private craft brewers, with the occasional large transaction, such as the acquisitions of Greene King plc. The strong activity in the non-alcoholic beverage sector is supported by tailwinds from cannabis-infused beverages, in addition to those from other specialty and craft-style drinks like kombucha, natural tea and cold brew coffee. Both strategic and financial buyers have delved into venture capital-type funding of growth equity investments to nurture growing brands, presumably as a precursor to eventual acquisitions.
The market witnessed three multi-billion-dollar transactions in the fourth quarter of 2019: the acquisition of Greene King plc by CK Asset Holdings Limited (SEHK:1113) for $6.1 billion; the acquisition of Arnott's Biscuits Holdings, Campbell Hong Kong and Related Business of Campbell Soup Company by KKR & Co. Inc. (NYSE:KKR) for $2.2 billion; and the acquisition of Reinhart FoodService L.L.C. and Associated Real Estate Companies by Performance Food Group Company (NYSE:PFGC) for $2 billion. Additionally, a few notable transactions were announced: the acquisition of the U.S. Ice Cream Business of Nestlé S.A. by Froneri International Limited for $4 billion; the acquisition of China Agri-Industries Holdings Limited (SEHK:606) by COFCO (Hong Kong) Limited for $1.2 billion; the acquisition of the Wine and Spirits Portfolio of Constellation Brands, Inc. by E. & J. Gallo Winery, Inc. for $1.1 billion; and the acquisition of Craft Brew Alliance, Inc. (NasdaqGS:BREW) by Anheuser-Busch Companies, LLC for $288 million. From an M&A perspective, the food and beverage sector will continue to be highly active as new entrants seek growth capital and mature conglomerates seek to diversify their portfolio of legacy brands with high-growth, specialty assets. Following years of aggressive cost-cutting and a focus on boosting margins, companies are paying more attention to spending in order to reignite growth and keep their brands competitive. The focus going forward will likely be on smaller deals that give scale, entrance into new markets or faster-growing categories to complement their existing portfolios. While strategic buyers still lead in terms of acquisitions within the food and beverage space, financial buyers are increasingly active due to the industry’s relative resistance to economic downturn.
Total Transaction Value ($bn)1 Transaction EV/EBITDA Multiples1
1 4 5 6 7 8
1 Source(s): S&P Capital IQ, Pitchbook 2 Number of closed transactions only include transactions with disclosed transaction values.
1 Source(s): S&P Capital IQ, Pitchbook 3 PEG = industry P/E ratio divided by the industry LT Growth (%) estimate.
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
1 Source(s): S&P Capital IQ, Pitchbook 2 Number of closed transactions only include transactions with disclosed transaction values.
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Transaction Activity by Geographic Region Number of Closed Transactions by Geographic Region1
Anheuser-Busch InBev SA/NV (ENXTBR:ABI) completed the acquisition of ABI SAB Group
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Beverages Public Company Comparable Analysis – Beverages ($mm)1
Public Company Comparable Analysis
Food Distributors Public Company Comparable Analysis – Food Distributors ($mm)1
Food Products Public Company Comparable Analysis – Food Products ($mm)1
Food Retail Public Company Comparable Analysis – Food Retail ($mm)1
Restaurants Public Company Comparable Analysis – Restaurants ($mm)1
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
1 Source(s): S&P Capital IQ, Pitchbook 4 Market Capitalization as of 12/31/19 5 Adj. mean excludes high and low values.
Financial Buyers Active Financial Buyers – Food & Beverage1
1 Source(s): S&P Capital IQ, Pitchbook
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Acquiring Company Announced Closed TargetJul-19 Dec-19 Dairy and Water Business in UzbekistanJul-19 Jul-19 Itambé Alimentos S.A.Jul-19 Jul-19 Commonw ealth Dairy, LLCDec-19 Dec-19 Senselet Food Processing PlcFeb-19 Apr-19 CytoSport Business of Hormel Foods CorporationNov-18 Jan-19 Pipers Crisps LtdDec-18 Dec-19 Saint Paul, Minnesota Facility of Agropur Inc.Jun-19 Aug-19 St. Albans Cooperative Creamery, Inc.Apr-19 Jan-19 Stremicks Heritage Foods, LLCOct-19 Dec-19 Tortoise Restaurant Group Inc.Apr-19 Jul-19 Assets of Allô! Mon CocoJun-19 Jul-19 Assets of Yuzu SushiNov-19 Nov-19 National Beef Packing Company, LLCDec-18 May-19 Quickfood Sociedad AnonimaDec-18 Jan-19 Várzea Grande-MT Unit of BRF S.A.Nov-19 Nov-19 Krispy Kreme Mexico, S. de R.l. de C.V.
Dec-19 Nov-19 Six Krispy Kreme Franchise Locations of Westw ard Dough Operating Company, LLC
Apr-19 Apr-19 Portfolio Of Wine And Spirits Brands And Six Winemaking Facilities of Constellation Brands, Inc.
Jun-18 Jul-18 Locations Brand Of Shooting Gallery Wines, LLCAug-19 Nov-19 Operations In Cambria, Wisconsin of Del Monte Foods, Inc.Sep-19 Sep-19 Wisconsin Vegetable Processing PlantFeb-18 Feb-18 Maraschino Cherry Business of Burnette Foods, Inc.Oct-19 Oct-19 Les Rotisseries BennyAug-19 Aug-19 ChocolatoJun-19 Jun-19 Big Rig Restaurants/Big Rig Brew ery
Groupe Lactalis S.A.
E. & J. Gallo Winery, Inc.
MTY Food Group Inc.
Marfrig Global Foods S.A.
Krispy Kreme Doughnut Corporation
PepsiCo, Inc.
Dairy Farmers of America, Inc.
Seneca Foods Corporation
Foodtastic Inc.
Acquiring Company Announced Closed Target
Aug-19 Dec-19 Arnott's Biscuits Holdings, Campbell Hong Kong and Related Business of Campbell Soup Company
Dec-17 Jul-18 Upfield FoodsOct-17 Oct-17 PT Nippon Indosari Corpindo TbkDec-19 Dec-19 Comercial Gallo S.A.Mar-19 Mar-19 Astral Foods LimitedJan-19 Jan-19 The SPAR Group LtdOct-19 Oct-19 Buffalo Wild Wings Restaurant Property Located in TexasSep-19 Sep-19 Outback Steakhouse Restaurant Property in OhioAug-19 Aug-19 McDonald's Restaurant in VirginiaAug-19 Aug-19 Arby's Restaurant Property in IndianaJun-19 Jun-19 Wendys Restaurant in OhioJun-19 Jun-19 Three Arby's RestaurantsJun-19 Jun-19 Property Located in FloridaApr-19 Apr-19 LongHorn Steakhouse Property and An IHOP PropertyJan-19 Jan-19 Outback Steakhouse Restaurant in New MexicoOct-19 Oct-19 Matthew WalkerSep-19 Oct-19 Kettle Foods Ltd./Yellow Chips B.V.Dec-17 Dec-17 Confectionery Division of Raisio plcJun-19 Sep-19 Del Frisco's Restaurant Group, Inc.Apr-19 Apr-19 Susana Balbo WinesDec-18 Apr-19 The Cholula Food Company IncSep-19 Sep-19 Cafe Valley, Inc.Jun-19 Jun-19 Bragg Live Food Products, Inc.Nov-18 Nov-18 Backerhaus Veit Ltd.Jun-19 Jun-19 La Galvanina S.p.AFeb-19 Feb-19 E&A Scheer BVJan-17 Jan-17 NuStef Foods LimitedMar-19 Apr-19 Turkey Hill Business of The Kroger Co.Oct-18 Oct-18 Pretzels, Inc.Oct-18 Oct-18 Louisiana Fish Fry Products LTD
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Date Closed
Target Target Description Acquiring Company Transaction Value
LTM EV/Revenue
LTM EV/EBITDA
Announced Nestlé S.A.(U.S. Ice Cream Business)
Business comprises ice cream manufacturing operations.
Froneri International Limited $4,000 N/A N/A
Announced China Agri-Industries Holdings Limited
Engages in the production, processing, and distribution of agricultural products.
COFCO (Hong Kong) Limited 1,266 0.4x 14.6x
Announced Constellation Brands, Inc.(Wine And Spirits Portfolio)
Portfolio comprises w ine and spirit production operations.
E. & J. Gallo Winery, Inc. 1,093 N/A N/A
Announced Craft Brew Alliance, Inc. Brew s and sells craft beers and ciders. Anheuser-Busch Companies 288 1.9x 15.8x
Dec-19 HyLife Ltd. Produces and distributes pork products for customers w orldw ide.
Charoen Pokphand Foods Public Company Limited
373 N/A N/A
Dec-19Reinhart FoodService L.L.C. and Associated Real Estate Companies
Operates as a foodservice distributor.Performance Food Group Company 2,000 0.3x N/A
Dec-19
Campbell Soup Company(Arnott's Biscuits Holdings, Campbell Hong Kong and Related Business)
Business comprises snacks, soups, meals, and beverages.
KKR & Co. Inc. 2,200 N/A 6.5x
Dec-19 Bare Arms Brew ing LLC Produces craft beer. Tw o Rivers Beer Company N/A N/A N/A
Dec-19 Medicannabis S.A.S. Ow ns and operates as a medicinal cannabis company.
Xebra Brands Ltd. N/A N/A N/A
Dec-19 Ruchi Soya Industries Limited Engages in processing of oil seeds in India. Patanjali Ayurved Limited 608 N/A N/A
Dec-19 PNC, Inc. Operates as an independent w holesale food distributor.
Pacif ic Ventures Group, Inc. 6 0.2x N/A
Dec-19 Goodman Fielder Pty LimitedEngaged in the production, marketing, and distribution of bread, grocery, dairy, and poultry products.
Wilmar International Limited 325 0.3x N/A
Dec-19 Zumbro River Brand, Inc. Engages in producing and packaging food ingredients and f inished products.
SensoryEffects Flavor Company 52 N/A N/A
Dec-19 Druid City Brew ing Company, LLC Operates a brew ery. Straight To Ale Brands Inc N/A N/A N/A
Dec-19 Ballast Point Brew ing & Spirits Operates as a brew ery. Kings & Convicts Brew ing N/A N/A N/A
Nov-19 National Beef Packing Company, LLC
Produces and sells meat products. Marfrig Global Foods S.A. 970 0.4x 4.6x
Nov-19 Nireus Aquaculture S.A. Produces and trades in Mediterranean aquaculture species w orldw ide.
Andromeda Seafood Limited 206 0.8x 4.9x
Nov-19 GongCha Korea.Co.,Ltd Ow ns and operates bubble tea restaurants. TA Associates Management 320 2.9x 12.0xNov-19 Pahlmeyer, LLC Produces w ines. E. & J. Gallo Winery, Inc. N/A N/A N/ANov-19 Chicken Time Co., Ltd. Ow ns and operates dining restaurants. Minor Food Group Plc 66 N/A N/A
Nov-19 Somerset Inc. Produces and sells caffeinated w ater beverages.
New Slice Ventures LLC N/A N/A N/A
Nov-19 Stillhouse Spirits Co. Produces and sells w hiskey. Bacardi Limited N/A N/A N/ANov-19 Southern Clif f Brands Inc. Manufactures and distributes cider. Valens GroWorks Corp. 5 N/A N/A
Nov-19 Jetro Holdings, Inc. Operates restaurants and distributes groceries.
Fomento Económico Mexicano, S.A.B. de C.V.
750 N/A N/A
Nov-19 Quest Nutrition, LLC Produces and markets protein bars. Atkins Nutritionals Holdings, Inc. 1,000 N/A N/A
Nov-19 Hunan 39 PU Tea Co., Ltd. Engages in research and development, and distribution of tea products.
Ming Yun Tang (Shanghai) Tea 14 N/A N/A
Nov-19 B&R Global Holdings, Inc.Operates as a food w holesaler and distributor for Asian restaurants in the United States.
HF Foods Group Inc. 808 1.5x 33.9x
Nov-19International Dehydrated Foods, Inc. and American Dehydrated Foods, Inc.
Develops, produces, and supplies ingredients to pet-food manufacturers. Symrise AG 900 4.1x N/A
Nov-19 Simply Southern Restaurant Group, Inc.
Ow ns, operates, and franchises restaurants in the Southeast United States.
Brentw ood Associates, Inc. N/A N/A N/A
Oct-19 Caviar Inc. Provides an online platform that enables users to order food from local restaurants.
DoorDash, Inc. 410 N/A N/A
Oct-19 Million Master Investment Limited Ow ns and operates an agricultural and food produce retail chain.
Yield Smart Limited 133 1.2x N/A
Oct-19 Food Junction Management Ow ns and manages food courts and outlets. Topw in Investment Holding 58 N/A N/A
Oct-19 Greene King plc Operates as a pub retailer and brew er in the United Kingdom.
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Date Closed
Target Target Description Acquiring Company Transaction Value
Balmoral specializes in helping clients sell their businesses, source and complete acquisitions, and raise or refinance capital. We work with business owners, corporations and financial investors worldwide involving early-stage growth companies, successful mature businesses, corporate divestitures, special situations, and restructurings. Mergers & Acquisitions
♦ Buy- and sell-side advisory Capital Raising
♦ Growth and acquisition capital, leveraged buyouts, financial restructuring, late-stage venture capital and recapitalizations Other Services
♦ Valuation analysis, consulting, financial modeling and forecasting
Balmoral is an independent investment bank focused on providing mergers & acquisitions, corporate finance, and financial restructuring advisory services involving mid-sized transactions. We bring a powerful combination of deep experience, industry expertise, and broad market reach to every client engagement. Our senior professionals have decades of experience and collectively have advised on more than $35 billion of transactions. Unlike firms that have a more rigid transaction approach, we focus first and foremost on understanding our clients’ goals and developing tailored solutions to achieve exceptional outcomes on their behalf. Our practice is global, but the culture of our firm reflects our Midwestern roots in terms of values, work ethic, and focus on developing long-term relationships. Our clients value our advice and appreciate our results. Since inception, more than half of our completed transactions were with repeat clients.
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Balmoral Advisors | 100 S. Wacker, Suite 850, Chicago, IL 60606 | +1 (312) 766-9890 | www.balmoraladvisors.com *Securities offered through Bridge Capital Securities, Inc. Member FINRA/SIPC.
Completed Transactions Since 2015
Acted as Financial Advisor to Advanced Diamond Technologies Inc. Acted as Financial Advisor to Arsenal Capital Partners
Acted as Financial Advisor to Cathay Industries Acted as Financial Advisor to East West Copolymer Acted as Financial Advisor to East West Copolymer Acted as Financial Advisor to East West Copolymer
Acted as Financial Advisor to Melior Innovations
Acted as Financial Advisor to L Street Collaborative
Acted as Financial Advisor to Haverhill Chemicals
Acted as Financial Advisor to East West Copolymer
Acted as Financial Advisor to Axiall Corporation
Acted as Financial Advisor to Axiall Corporation
Has sold its U.S. High Purity Division to
Has been acquired by
Acted as Financial Advisor to NGC Acted as Financial Advisor to Oldcastle Infrastructure
Acted as Financial Advisor to P2 Science
Acted as Financial Advisor to Particle Dynamics
Acted as Financial Advisor to PlastiComp
Acted as Financial Advisor to SemiTorr Group, Inc.
Has sold its Industrial Division to
Has been acquired by
Stetco Hydraulic Crane
A division of
Has been acquired by
Has been acquired by
A subsidiary of
Has been acquired by
An affiliated portfolio company of
Acted as Financial Advisor to Transom Capital Group
Has received financing in relation to their acquisition of
An Affiliated Portfolio Company of
Has been refinanced by
Has Divested its Specialty Phosgene Derivatives Business to
Has Sold its Manufacturing Facilities in a Chapter 11 §363 Asset Sale to $16,000,000
Senior Secured Credit Facility Provided by Has Received a Growth Capital Investment
from
Has Received a Second Growth Capital Investment from
Has Sold its Manufacturing Facilities in a Chapter 11 §363 Asset Sale to