RubinBrown Food & Beverage Update 2015

M&A Activity Overview: Overall Transaction Activity

Bigger Deals, Albeit at a Slowing Pace A wide range of acquisitions are taking place in the industry, with buyers targeting everything from small, single-product companies to large corporations with a full arsenal of product categories and brand names. On one end of the spectrum, you’ve got the mega-deal, headline grabbers (e.g., H.J. Heinz’s $45 billion merger with Kraft Foods, creating the 5 th largest food and beverage company in the world) – while on the other end, there remains a healthy flow of small-to-midsize deals taking place in the middle market, as well as bigger corporations adding new products and brands on a much smaller scale to capture the ever-evolving consumer tastes (e.g., Hormel Foods’ $0.8 billion acquisition of Applegate Farms, an organic meat producer). These trends, in combination with a low interest rate environment and excess corporate cash stockpiles, have contributed to above-average deal activity in the food and beverage industry over the last several years. While the industry has seen (and should continue to see) heightened transaction activity, the pace has slowed somewhat over the last three quarters, in spite of median deal sizes increasing considerably of late. During the first six months of 2015, the total number of food and beverage transactions continued the downward trend, that began in the 4 th quarter of 2014, with 111 deals closing during the period – down from a total of 142 transactions during the second half of 2014, and 133 transactions during the first half of 2014.

Food & Beverage Transaction Activity

$120.0

100

$100.0

80

$80.0

60

$60.0

40

Millions

$40.0

No. of Transactions

20

$20.0

$0.0

0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015

Median Enterprise Value

No. of Transactions

Source: S&P Capital IQ Reflects all closed Food & Beverage transactions, regardless of size. Median Enterprise Value is based on transactions where this information was available, regardless of size.

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Food & Beverage Industry Sector: 2015 Mid-Year Update

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