The document provides a recommendation from a consulting team to The Kroger Co. Board of Directors. It proposes that Kroger acquire Grubhub, the largest online and mobile food ordering company, to expand into food delivery and increase its online presence. It also recommends that Kroger divest its convenience stores and gas stations to Alimentation Couche-Tard to help finance the Grubhub acquisition. The proposal aims to address Kroger's declining same-store sales growth and help it adapt to changing consumer preferences for online shopping and food delivery.

1. Recommendation to The Kroger Co. | Board of Directors
Discussion Materials | December 1st, 2017
1

2. Trevor Joseph| Carmel, Indiana
➢ ManagingDirector
➢ Kelley School of Business
➢ Major: Finance
Philip Abularrage| Deltona, Florida
➢ Managing Director
➢ College of Arts and Sciences
➢ Major: Economics
Rajiv Chunduri| Avon, Connecticut
➢ Managing Director
➢ Kelley School of Business
➢ Majors: Finance, Accounting
2
Taylor Levin| Carmel, Indiana
➢ Vice President
➢ Kelley School of Business
➢ Major: Finance
Jack Gallo| San Francisco, California
➢ Vice President
➢ School of Public & Environmental
Affairs
➢ Major: Public Financial Management
John Dougherty| Ridgewood, New Jersey
➢ Vice President
➢ Kelley School of Business
➢ Majors: Economic Consulting,
International Business
Our Team

3. I. Executive Summary
II. Macroeconomic Trends & Industry Analysis
III. Overview of Kroger & Stock Analysis
IV. Strategic Proposal
V. Valuation Summary
VI. Appendix
VII. MergerConsequences
VIII. Secondary Proposal
4
6
10
13
20
22
34
40
3
Table of Contents

4. Executive Summary
4

5. ➢ The Kroger Company is one of the largest retailers based in the US made up of supermarkets,
price-impact warehouse stores, marketplace stores, and multi-department stores
➢ Kroger is a market leader in the food retail market, operating more than 1,300 supermarkets
across 24 states across the country
➢ The Kroger Company has expressed interest in pursuing an acquisition to regain market share and
counteract issues surrounding same-store growth
➢ Strategic proposal looks to solve the issues of competitors’ rising market share, Kroger’s declining
same-store growth, and the merging of e-commerce with the grocery industry
➢ The divestiture and buy-side acquisition provides short-term relief and long-term growth
➢ The Kroger Company has decided to reduce capital expenditures by limiting the expansion of
retail locations and investing into in-store technology
➢ Kroger is facing numerous entrants into the evolving grocery industry making it the optimal
time to expand into new markets and lead the e-commerce venture
➢ Considering major new entrants within the industry, the acquisition of Grubhub will expand
market share within the industry and solve the lack of same-store growth
➢ The divestiture of Kroger’s convenience stores provides sufficient capital at a strong
multiple and limits the dependence on the volatile nature of oil
➢ Grubhub will promote vertical integration, data analytics, and restructure distribution
Overview
Scope of
Proposal
Strategic
Assessment
5
Recommendation
Executive Summary

6. Macroeconomic Trends & Industry Analysis
6

7. 7
General
Outlook
Opportunities
Trends
Source: Wall Street Journal
Source: News Filings
242
243
244
245
246
247
188
189
190
191
192
193
194
195
196
2017-01-01 2017-03-01 2017-05-01 2017-07-01 2017-09-01
PPI CPI
CPI and PPI Overtime
100.6
100.8
101
101.2
101.4
101.6
101.8
Consumer Confidence Index 2017
U.S. Macroeconomic Analysis
1. GDP expected to grow by 2.3% in 2018 along with gradual increase of inflation rates
2. The decline of unemployment to relatively historic lows paired with low inflation rates create a positive outlook for the future of the markets
3. Expectation of tax cuts stimulate growth due to full depreciation expensing within one year which spurs capital investments
➢ High consumer confidence
• Consumer confidence remains high–sentiment rose to 125.9 points in October from 120.6 points in August, which represents a 17 year high
• Low unemployment rates, record high stock prices, along with low inflation rates harvest increasing discretionary income, allowing consumers
to buy more
➢ Interest Rates
• Interest rates will rise as the Fed attempts to initiate contractionary fiscal policy and curtail the growth of the economy
• The Fed is aiming to move from the current interest rates of 1-1.25 basis points to 1.25-1.5 basis points by the end of 2017, and estimates to
normalize it to 2.0 in 2018
• The Fed is beginning to unwind the balance sheet by selling the bonds bought during the phase of quantitative easing
➢ Oil
• The price of crude oil has recently risen to a two year record high- resulting in more profitable fuel sales
• Higher oil prices increase production costs for all markets across the U.S. economy
➢ Low interest rates, upcoming tax cuts, and high consumer confidence put companies in an excellent position for long-term sustainable growth

8. ➢ Customer interest in non-traditional markets
• Customer base of traditional supermarkets have decreased 20% from 2005
• Nearly half of millennials are moving towards using online-only retailers
• E-commerce sales are expected to rise at an annual rate of 7.8%
• Primary loyalty of customers is shifting away from traditional formats or not claiming a primary store
➢ Trend towards convenience
• 65% of primary grocery shoppers prefer a location that is conveniently located
• Frequency of shopping with online-only retailers amongst millennials has increased 15% in the past year
• With increasing purchasing power amongst millennials, convenience is a factor with more importance than any other pricing decisions
General
Outlook
Opportunities
Trends
➢ The food retail industry is facing pressure from increasingly low margins and heavy competition in new markets by innovating and adapting to new
consumer preferences
Source: Mintel Reports
8
➢ Popularity amongst discount grocers and foodservice in retail suggests an opportunity for a grocer that incorporates the convenience of discount groceries
and foodservices with low prices
Other methods of
buying groceries
have overtaken the
traditional in-store
method of purchase
Industry Analysis
50.4%
48.7%
45.9%
49.6%
51.3%
54.1%
44%
46%
48%
50%
52%
54%
56%
2010 2012 2014 2016 2018 2020 2022
Supermarkets
Other MULO

9. Growing Food Delivery Sales
Opportunities
➢ Increasing popularity in food and delivery industry provides the ability for the industry to grow seven fold
➢ Third-party delivery usage creating a loyal customer base for current foundation resulting in increased sales
➢ Customers stepping away from the trend of in-store shopping and pickup towards online orders and delivery services
➢ Food delivery market has expanded recently, and is projected to continue expanding due to younger generations having more purchasing power and
increasing popularity of online food delivery services
General
Outlook
Transition from
In-Store to
Online
Source: Wall Street Research
9
8 8 11 17
27
36 42 47 53 58
92 92 89 83
73
64 54
53 47 42
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Online Offline
Food Delivery Online vs. Offline
-6.9% -7.6%
25.0% 14.9%
Industry Analysis
CAGR
2015-18
CAGR
2018-20

10. Overview of Kroger
10

11. Background & Description Financial Summary
11
➢ Enterprise Value:
➢ EquityValue:
➢ Estimated Year Statistics:
• Revenue:
• Gross Profit:
• EBITDA:
• Current Assets:
• EV/Sales:
➢ EV/Sales
➢ EV/EBITDA:
$ 37,038 Million
$ 22,015 Million
$119,374 Million
$26,150 Million
$5,420 Million
$10,611 Million
0.3x
6.4x
Source: Company Filings
➢ Largest food retailer in the U.S. with nearly 2,800 stores across 35 states
➢ Has started to focus on health foods following market trends that reflect consumer desires
➢ Focused primarily on developing supermarkets rather than convenience stores
➢ Implemented online grocery ordering through ClickList and has been pushing to make grocery shopping
a more streamlined process following current industry trends
➢ Current store locations are located entirely in the U.S., primarily within the Midwest
Share of Revenue by Store Type
94.6%
3.4%
0.5% 1.5%
Supermarkets
Convenience
Stores
Jewlery Stores
Other
Identical Store Sales by Quarter
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2015 2016 2017
Company Overview (KR)

12. Source: News Filings
12
Stock Performance and Significant Milestones (KR)
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
StockPrice
Amazon’s acquisition
of Whole Foods
causes Kroger’s stock
price to plummet 26%
Kroger reports a -.7%
growth in identical
supermarket sales

13. Strategic Proposal
13

14. ➢ Leading online and mobile food ordering company with a presence in over 1,300 U.S. cities and London
➢ Provides an aggregated database of approximately 415,000 menus from 75,000 restaurants across all 50
states in the United States
➢ Makes takeout accessible for consumers, enabling them to discover new restaurants and place their
orders anytime from anywhere from most devices
➢ Since it’s founding in 2004, Grubhub has acquired similar food ordering services such as Eat24 and
Seamless, making it the largest company in the food delivery industry
➢ Grubhub currently processes 304,500 daily orders and serves 9.81 million active users
➢ Experienced a 40% sales growth in 2016
Background & Description Financial Summary
14
• Revenue:
• Gross Profit:
• EBITDA:
• Current Assets:
• EV/Sales:
➢ EV/Sales
➢ EV/EBITDA:
➢ Enterprise Value: $ 5,669 Million
➢ Equity Value: $ 5,909 Million
➢ Estimated Year Statistics:
$ 636 Million
$ 216 Million
$ 144 Million
$ 396 Million
12x
48x
Company Overview (GRUB)
Grubhub Market Share Grubhub Annual Revenue
61%
29%
7%
3%
Grubhub
Chow Now
Deliveroo
Caviar
$60.61 $82.30
$137.14
$253.87
$361.83
$493.33
$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
2011 2012 2013 2014 2015 2016
RevenueinmillionU.S.Dollars

15. Divestiture: C-Store and Gas Station to Alimentation Couche-Tard
➢ One of the leaders in the Canadian convenience store industry
➢ The company operated around 7,888 convenience stores throughout
North America, including 6,490 stores with road transportation fuel
dispensing, as of April 24, 2016
➢ 80,000 employees and revenue amounting to $34 billion in 2016
➢ The Kroger Company could finance approximately 40% of the
Grubhub purchase with the cash received from the divestiture
➢ Alimentation Couche Tard has a current Debt/EBITDA of 1.33x
➢ The deal will be structured primarily debt and cash at a 10x multiple
➢ The convenience stores and gas segment will be valued at $2,055B
utilizing a 10x EBITDA multiple
➢ This multiple is the leading industry average derived from the precedent
transactions from within the industry
Company Overview Strategic Fit
Financing
Alimentation
Couche Tard
would increase
the amount of C-
Stores owned by
roughly 10%
➢ The leaders in the convenience store market have been competing for
market share by acquiring more locations. Adding 784 more locations to
their portfolio would significantly increase their market share, giving them
a competitive advantage
➢ Couche-Tard has recently started expanding into convenience stores that
are more food-oriented such as Casey’s General Store. Kroger’s current
convenience stores carry many Kroger products, making it a good fit in
Couche-Tard’s current strategy
15

16. Financial Ability
StrategicFit Acquirer Matrix
16

17. 17
Source: Wall Street Research
Source: News Filings
Strategic Rationale
➢ Grubhub can be combined with the existing ClickList program to create a seamless
grocery delivery option
➢ Minimal training and staffing requirements allow for implementation of new
programs without greatly increased costs
➢ The combined program allows for boosted same store sales year over year without
increasing foot traffic or labor costs
➢ Delivery from Kroger stores can include fresh prepared food in alignment with
Grubhub’s current business model; Consolidate retail locations and increase
distribution hubs to maximize delivery efficiencies
➢ The low capital expenditures of Grubhub’s business model provide the combined
company with a low cost revenue stream
➢ The combination of Grubhub and Kroger’s data collection efforts allows for the
creation of some long-term cost synergies
➢ The combined company has two distinct revenue streams that allow for a more
diversified and robust profit structure
➢ The recent acquisition of Eat24 by Grubhub for $287.5 million creating the largest
food delivery service in the US
➢ Grubhub now controls 61% of the food delivery market, the combined company
can provide another opportunity to greatly increase that market share
➢ The information and trends gleaned from complete food purchasing profiles is
more valuable than just raw food purchasing data, these profiles are only able to be
crated under the combined company
➢ Ultra-large traditional and online competitors provide a threat in the industry due to
pricing capabilities
➢ By expanding upon online capabilities Kroger can effectively defend itself against
competitive threats from online retailers, specifically Amazon
Vertical Integration Secondary Revenue Stream

18. 18
Source: Wall Street Research
Source: News Filings
Strategic Rationale
➢ The retail market is moving towards online sales at a rapidly increasing rates
➢ The ability to order and deliver perishable items provides the opportunity to move food retail into the online
ecosystem
➢ Data collection is a robust and fast growing industry with undeveloped regulation and government oversight
➢ Utilize data to continue vertical integration and restructure of combined company to control the majority of
online food sales and prevent the erosion of market share by online retailers
➢ The combined company is both the largest the largest grocer and food delivery service in the US allowing for
unprecedented ability to collect food purchase data
➢ The combined company can utilize a more diverse and complete data pool to better recommend purchases
to customers
➢ More complete food purchasing profiles of consumers allows for better targeted sales opportunities
➢ A more full understanding of food purchasing habits of consumers creates opportunities to better organize
highly volatile food stocks
Data Analytics Increased Market Presence

19. Stan Chia Girish Lakshman
19
Source: Wall Street Research, Company Website
Alex Tosolini Barbara Coppola
➢ Former head of marketing at Google
➢ Advanced Management Program graduate
from Harvard and MBA from INSEAD
➢ Chief Marketing Officer of Grubhub and
oversees marketing department, focusing on
brand affinity and user adoption
➢ 17 years of technology marketing experience
spanning over nine countries
➢ Served as Senior Vice President of Global
eBusiness and Vice President of Global
eCommerce at Proctor & Gamble Co.
➢ Named first-ever Senior Vice President of
New Business Development for Kroger Co.
➢ Responsible for identifying, evaluating, and
developing new opportunities that capitalize
on Kroger’s powerful assets
➢ Former general manager at Amazon and
senior manager at Cisco Systems, Inc.
➢ Launched Amazon's first toy "pop-up" store
➢ Helped expand Grubhub Delivery from 5 to
nearly 70 markets in 2 years
➢ Responsible for operations infrastructure,
business development, data operations,
advanced analytics, and all aspects of
Grubhub’s revenue
➢ Served as Vice President of Worldwide
Transportation Strategy, Technology and
Customer Returns at Amazon
➢ Currently President, Fulfillment – Supply Chain
and Sourcing of Sears Holdings Corporation
➢ One of Grubhub's current Board of Directors
Key Employees in Transaction

20. Valuation Summary
20

21. 21
Football Field Analysis (GRUB)
$- $10 $20 $30 $40 $50 $60 $70
Comparable Companies
Discounted Cash Flows
Precedent Transactions
52-Week Range
Leveraged Buyout

22. Appendix
22

23. 23
Comparable Companies Analysis (KR)
The Kroger Co. (NYSE: KR)
Comparable Companies Analysis
($ in millions, except per share data)
Company Ticker
Current Share
Price
% of
52-wk. High
Equity
Value
Enterprise
Value
LTM
Sales
LTM
EBITDA
LTM
EBIT
LTM
Earnings LTM Sales 2017E Sales
2018E
Sales
LTM
EBITDA
2017E
EBITDA
2018E
EBITDA
LTM
EBIT
2017E
EBIT
2018E
EBIT
LTM
EBITDA Margin
Debt /
EBITDA
Target
The Kroger Co. KR $22.98 63% $20,441 $31,150 $118,050 $5,289 $2,869 $1,540 0.30x 0.40x 0.30x 6.40x 7.80x 5.80x 11.70x 13.00x 10.20x 4.5% 2.70x
Comparable Companies
Costco Wholesale Corporation COST $171.59 94% 74,983 75,910 129,025 5,543 4,173 2,679 0.60x 0.60x 0.50x 13.70x 13.00x 12.00x 18.30x 17.10x 15.70x 4.3% 1.20x
CVS Health Corporation CVS $70.53 83% 71,941 105,740 182,351 11,704 9,219 5,050 0.50x 0.50x 0.50x 8.10x 7.60x 7.30x 10.30x 9.50x 9.10x 6.4% 2.20x
Publix Super Markets - $36.85 82% 27,216 14,010 35,024 27,486 - - - - - - - - - - - 78.5%
Sprouts Farmers Market, INC SFM $21.76 84% 2,895 3,380 4,506 311 220 136 0.70x 0.80x 0.70x 10.80x 10.50x 10.50x 15.30x 14.60x 15.10x 6.9% 1.60x
Target Corporation TGT $55.87 71% 30,518 42,380 69,803 6,917 4,520 2,650 0.60x 0.60x 0.60x 5.90x 6.30x 6.50x 9.10x 9.60x 10.60x 9.9% 1.80x
Walgreens Boots Alliance, INC WBA $70.30 78% 71,003 82,610 118,214 7,096 5,411 4,078 0.70x 0.80x 0.60x 11.70x 13.40x 8.70x 15.30x 17.60x 10.20x 6.0% 2.00x
Wal-Mart Stores, Inc. WMT $96.61 96% 288,864 304,910 495,012 30,721 20,188 11,444 0.70x 0.50x 0.70x 10.90x 6.90x 10.10x 16.60x 9.70x 14.70x 6.2% 1.60x
Mean 84% 0.63x 0.63x 0.60x 10.18x 9.62x 9.18x 14.15x 13.02x 12.57x 16.9% 1.73x
Median 83% 0.65x 0.60x 0.60x 10.85x 9.05x 9.40x 15.30x 12.15x 12.65x 6.4% 1.70x
High 96% 0.70x 0.80x 0.70x 13.70x 13.40x 12.00x 18.30x 17.60x 15.70x 78.5% 2.20x
Low 71% 0.50x 0.50x 0.50x 5.90x 6.30x 6.50x 9.10x 9.50x 9.10x 4.3% 1.20x
Enterprise Value /
Mean Enterprise Value / LTM EBITDA 10.18x
LTM EBITDA $5,289
Enterprise Value $53,860
Less: Total Debt $14,077
Less: Noncontrolling Interest $12
Plus: Cash and Cash Equivalents $322
Implied Equity Value $40,093
Total Shares Outstanding 958.0
Implied Share Price $41.85
Multiple EV / LTM EBITDA
Metric $5,289
Multiple Range 8.00x - 12.00x
Enterprise Value $42,312 - $63,468
Implied Equity Value $28,545 - $49,701
Implied Share Price $29.80 - $51.88
Implied Equity Value and Share Price
Implied Price Range
7.0x 8.0x 9.0x 10.0x 11.0x
24.28$ 29.80$ 35.32$ 40.84$ 46.36$
12.0x 13.0x 14.0x 15.0x 16.0x
$21.57 $24.56 $27.56 $30.55 $33.55
7.0x 8.0x 9.0x 10.0x 11.0x
$27.83 $33.86 $39.89 $45.92 $51.95
7.0x 8.0x 9.0x 10.0x 11.0x
$42.14 $48.31 $54.48 $60.65 $66.82
Implied Share Price
EV / 2018E EBITDA
Implied Share Price
EV / LTM EBITDA
Implied Share Price
EV / LTM EBIT
Implied Share Price
EV / 2017E EBITDA

24. 24
Comparable Companies Analysis (GRUB)
Grubhub (NYSE: GRUB)
Comparable Companies Analysis
($ in millions, except per share data)
Company Ticker
Current Share
Price
% of
52-wk. High Equity Value Enterprise Value
LTM
Sales
LTM
EBITDA
LTM
EBIT LTM Earnings LTM Sales 2017E Sales
2018E
Sales
LTM
EBITDA
2017E
EBITDA
2018E
EBITDA
LTM
EBIT
2017E
EBIT
2018E
EBIT
LTM
EBITDA Margin Debt / EBITDA
Target
GrubHub GRUB-US $68.57 99% $5,944 $5,614 $615 $125 $84 $58,949 9.10x 8.30x 6.10x 44.91x 31.20x 22.70x 36.40x 43.40x 32.70x 20.4% -
Comparable Companies
Delivery HeroDHER $37.58 94% 6,648 6,370 420 (187) (233) (286) 15.20x 11.80x 8.30x - - 50.00x - - - -44.5% -
Domino's PizzaDPZ $170.87 77% 7,472 10,633 2,715 539 - 70 3.92x 3.41x - 20.84x 16.64x 12.45x 20.47x 34.56x 28.34x 19.9% 5.86x
Groupon GRPN $5.84 100% 3,261 2,842 2,906 143 - 86 0.98x 0.98x - 17.45x 10.33x 10.20x 69.95x 32.40x 19.20x 4.9% 1.81x
Postmates - - - - 464 55 - (26) 11 8.38x - - - - - - - - - -
Yelp YELP $47.69 99% 3,953 3,374 823 61 4 19 4.10x 3.54x - 49.24x 17.04x 12.70x - 54.43x 38.56x 7.4% 0.00x
Mean 92% 6.51x 4.93x 8.30x 29.18x 14.67x 21.34x 45.21x 40.46x 28.70x 2.56x
Median 96% 4.10x 3.48x 8.30x 20.84x 16.64x 12.58x 45.21x 34.56x 28.34x 1.81x
High 100% 15.20x 11.80x 8.30x 49.24x 17.04x 50.00x 69.95x 54.43x 38.56x 5.86x
Low 77% 0.98x 0.98x 8.30x 17.45x 10.33x 10.20x 20.47x 32.40x 19.20x 0.00x
Enterprise Value /
Mean Enterprise Value / LTM EBITDA 29.18x
LTM EBITDA $125
Enterprise Value $3,652
Less: Total Debt -
Less: Noncontrolling Interest -
Plus: Cash and Cash Equivalents $240
Implied Equity Value $3,891
Total Shares Outstanding 86.1
Implied Share Price $45.17
Multiple EV / LTM EBITDA
Metric $125
Multiple Range 12.00x - 16.00x
Enterprise Value $1,502 - $2,003
Implied Equity Value $1,741 - $2,242
Implied Share Price $20.22 - $26.03
Implied Equity Value and Share Price
Implied Price Range
27.0x 28.0x 29.0x 30.0x 31.0x
42.01$ 43.46$ 44.92$ 46.37$ 47.82$
12.0x 13.0x 14.0x 15.0x 16.0x
$14.48 $15.46 $16.43 $17.41 $18.38
8.0x 9.0x 10.0x 11.0x 12.0x
$19.50 $21.59 $23.68 $25.77 $27.86
7.0x 8.0x 9.0x 10.0x 11.0x
$18.55 $21.41 $24.28 $27.15 $30.02
EV / LTM EBIT
Implied Share Price
EV / LTM EBITDA
Implied Share Price
Implied Share Price
EV / 2017E EBITDA
Implied Share Price
EV / 2018E EBITDA

25. 25
Precedent Transactions Analysis
GrubHub (NYSE: GRUB)
Precedent Transactions Analysis
($ in millions, except per share data)
Premiums Paid
Over One Week
Prior to Announcement
6/16/2017 Amazon.com Inc Whole Foods Market Inc Cash 13,605$ 0.9x 10.9x 22.1x 402.00 49%
3/14/2016 Apollo Global Management LLC Fresh Market Inc Cash 1,334$ 3.4x 12.2x 15.0x - 25%
11/11/2015 Kroger Co/The Roundy's Inc Cash 792$ 2.1x 12.4x 17.1x (6.54) 60%
6/24/2015 Koninklijke Ahold Delhaize NV Delhaize Group SCA Stock 11,473$ 3.8x 16.5x 22.3x 39.75 27%
3/6/2014 Albertson's LLC Safeway Inc Cash 7,903$ 4.5x 23.4x 29.9x - 12%
Mean 2.93x 15.1x 21.3x 145.07 34.6%
Median 3.40x 12.4x 22.1x 39.75 27.0%
High 4.50x 23.4x 29.9x 402.00 60.0%
Low 0.86x 10.9x 15.0x (6.54) 12.0%
LTM
Net Income
LTM
EBITDate Announced Acquirer Target
Consideration
Type
Transaction
Value
LTM
Sales
LTM
EBITDA
Transaction Value /
14.0x 15.0x 16.0x 17.0x
$52.03 $55.54 $59.06 $62.58
Implied Share Price
EV / LTM EBITDA
Mean Enterprise Value / LTM EBITDA 15.08x
LTM EBITDA $303
Enterprise Value $4,569
Less: Total Debt -
Less: Noncontrolling Interest $0
Plus: Cash and Cash Equivalents $240
Implied Equity Value $4,809
Total Shares Outstanding 86.1
Implied Share Price $55.83
Implied Equity Value and Share Price
Multiple EV / LTM EBITDA
Metric $303
Multiple Range 7.00x - 10.00x
Enterprise Value $2,121 - $3,030
Implied Equity Value $2,361 - $3,270
Implied Share Price $27.40 - $37.96
Implied Price Range

26. 26
Discounted Cash Flow
Grubhub (NYSE: GRUB)
($ in millions, except per share data)
CAGR CAGR
2014A 2015A 2016A (2014-2016) 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E (2017-2021)
Revenue 253.87$ 361.83$ 493.33$ 39.4% 636.40$ 770.04$ 885.54$ 1,009.52$ 1,130.66$ 1,232.42$ 1,294.04$ 1,339.34$ 11.2%
% Growth 42.5% 36.3% 29.0% 21.0% 15.0% 14.0% 12.0% 9.0% 5.0% 3.5%
Cost of Goods Sold 153.89$ 231.36$ 324.54$ 420.02$ 508.61$ 585.34$ 667.80$ 748.50$ 815.86$ 856.66$ 886.64$
Gross Profit 99.98$ 130.47$ 168.79$ 29.9% 216.37$ 261.43$ 300.20$ 341.72$ 382.16$ 416.56$ 437.39$ 452.70$ 11.1%
% Margin 39% 36% 34% 34% 34% 34% 34% 34% 34% 34% 34%
Selling, General & Administrative 32.31$ 40.51$ 49.75$ 72.14$ 83.72$ 98.33$ 112.10$ 125.55$ 136.85$ 143.69$ 148.72$
EBITDA 67.67$ 89.96$ 119.04$ 32.6% 144.23$ 177.71$ 201.87$ 229.63$ 256.62$ 279.71$ 293.70$ 303.98$ 11.2%
% Margin 27% 25% 24% 23% 23% 23% 23% 23% 23% 23% 23%
Depreciation & Amortization 22.69$ 28.03$ 35.19$ 38.18$ 43.12$ 44.28$ 50.48$ 56.53$ 61.62$ 64.70$ 66.97$
EBIT 44.98$ 61.93$ 83.85$ 36.5% 121.08$ 151.45$ 172.60$ 197.50$ 221.77$ 218.09$ 229.00$ 237.01$ 10.1%
Tax Expense 20.72$ 23.85$ 34.30$ 50.65$ 61.21$ 70.85$ 81.17$ 90.60$ 89.10$ 93.55$ 96.83$
EBIAT 24.26$ 38.08$ 49.55$ 42.9% 70.44$ 90.24$ 101.75$ 116.33$ 131.17$ 128.99$ 135.44$ 140.18$ 10.3%
% Margin 10% 11% 10% 11% 12% 11% 12% 12% 10% 10% 10%
Depreciation & Amortization 22.69$ 28.03$ 35.19$ 38.18$ 43.12$ 44.28$ 50.48$ 56.53$ 61.62$ 64.70$ 66.97$
Capital Expenditures (3.65)$ (4.15)$ (24.09)$ (22.89)$ (21.74)$ (21.09)$ (20.03)$ (19.03)$ (18.65)$ (18.28)$ (18.10)$
Δ Net Working Capital 11.77$ (31.53)$ (12.54)$ (48.70)$ 21.26$ (11.60)$ 7.79$ (3.18)$ (3.18)$ (3.18)$ (3.18)$
Unlevered FCF 55.07$ 30.43$ 48.11$ 37.04$ 132.88$ 113.34$ 154.56$ 165.49$ 168.78$ 178.68$ 185.87$
WACC 8.76%
Discount Factor 92% 85% 78% 71% 66% 60% 56% 51%
Present Value 34.05$ 112.34$ 88.11$ 110.48$ 108.77$ 102.01$ 99.30$ 94.98$
Historical Period Projection Period
Discounted Cash Flow Analysis (GRUB) (1/2)

27. 27
2024 EBITDA $303.98
Exit Multiple 14.0x
Terminal Value $4,255.67
Discount Rate 8.76%
Present Value $2,797.19
Enterprise Value $3,547.23
% of Enterprise Value 65.73%
Implied EV/EBITDA 11.7x
Terminal Value Using Exit Multiple Method
Enterprise Value $3,547.23
Less Total Debt $0.00
Plus Cash & Cash Equivalents $239.53
Less Preferred Stock $0.00
Less Non-Controlling Interest $0.00
Implied Equity Value $3,786.76
Shares Outstanding 86.14
Implied Share Price $43.96
Implied Equity Value and Share Price
Discounted Cash Flow Analysis (GRUB)(2/2)

28. 28
Weight of Debt 0.00%
Cost of debt 2.20%
Tax Rate 41%
Tax-Effected Cost of Debt 0.00%
Weight of Equity 100.00%
Levered Beta 1.22
Risk-Free Rate 2.35%
Expected Market Return 7.60%
Market Risk Premium 5.25%
CAPM 8.76%
Weighted Cost of Equity 8.76%
WACC 8.76%
GRUB WACC Calculation
Debt
Equity
Comparables
LeveredBeta MVof Debt MVof Equity Debt-to-Equity MarginalTax Rate UnleveredBeta
Domino'sPizza 0.37 2,240.80 645.98 347% 35% 0.11
Groupon 1.52 33.36 188.83 18% 35% 1.36
Yelp 1.21 0.00 3,556.87 0% 35% 1.21
Median 1.21 18% 1.21
Mean 1.03 122% 0.90
ComparableCompaniesBetaCalculation
Mean Target Marginal
Unlevered Beta Debt-to-Equity Tax Rate Levered Beta
0.90 0% 35% 0.90
Grubhub Relevered Beta
WACC (GRUB)

29. 29
13.0x 13.5x 14.0x 14.5x 15.0x
7.8% $3,470.22 $3,574.84 $3,679.46 $3,784.08 $3,888.70
8.3% $3,407.98 $3,510.20 $3,612.43 $3,714.66 $3,816.89
WACC 8.8% $3,347.44 $3,447.34 $3,547.23 $3,647.13 $3,747.03
9.3% $3,288.54 $3,386.18 $3,483.81 $3,581.45 $3,679.08
9.8% $3,231.25 $3,326.68 $3,422.11 $3,517.54 $3,612.97
Exit Multiple
Enterprise Value
Exit Multiple
13.0x 13.5x 14.0x 14.5x 15.0x
7.8% $3,709.75 $3,814.37 $3,918.99 $4,023.61 $4,128.23
8.3% $3,647.51 $3,749.73 $3,851.96 $3,954.19 $4,056.42
WACC 8.8% $3,586.97 $3,686.87 $3,786.76 $3,886.66 $3,986.56
9.3% $3,528.07 $3,625.71 $3,723.34 $3,820.98 $3,918.61
9.8% $3,470.78 $3,566.21 $3,661.64 $3,757.07 $3,852.50
Implied Equity Value
Exit Multiple
13.0x 13.5x 14.0x 14.5x 15.0x
7.8% $43.07 $44.28 $45.50 $46.71 $47.92
8.3% $42.34 $43.53 $44.72 $45.90 $47.09
WACC 8.8% $41.64 $42.80 $43.96 $45.12 $46.28
9.3% $40.96 $42.09 $43.22 $44.36 $45.49
9.8% $40.29 $41.40 $42.51 $43.62 $44.72
Implied Share Price
Sensitivity Analysis (GRUB)

30. 30
Discounted Cash Flow
Kroger (NYSE: KR)
($ in millions, except per share data)
CAGR CAGR
2014A 2015A 2016A (2014-2016) 2017E 2018E 2019E 2020E 2021E (2017-2021)
Revenue 108,465.00$ 109,830.00$ 115,337.00$ 3.1% 119,373.80$ 122,955.01$ 126,336.27$ 129,494.68$ 133,379.52$ 2.8%
% Growth 1.3% 5.0% 3.5% 3.0% 2.8% 2.5% 3.0%
Cost of Goods Sold 85,512.00$ 85,496.00$ 89,502.00$ 93,224.05$ 95,715.80$ 98,348.94$ 100,807.66$ 103,831.89$
Gross Profit 22,953.00$ 24,334.00$ 25,835.00$ 6.1% 26,149.75$ 27,239.21$ 27,987.34$ 28,687.02$ 29,547.63$ 3.1%
% Margin 21% 22% 22% 22% 22% 22% 22% 22%
Selling, General & Administrative 17,161.00$ 17,946.00$ 19,178.00$ 19,849.23$ 20,629.14$ 21,196.44$ 21,726.35$ 22,378.14$
EBITDA 5,085.00$ 5,665.00$ 5,776.00$ 6.6% 5,419.52$ 5,729.07$ 5,909.89$ 6,079.67$ 6,288.49$ 3.8%
% Margin 5% 5% 5% 5% 5% 5% 5% 5%
Depreciation & Amortization 1,948.00$ 2,089.00$ 2,340.00$ 2,520.06$ 2,705.03$ 2,893.70$ 3,086.14$ 3,282.43$
EBIT 3,137.00$ 3,576.00$ 3,436.00$ 4.7% 2,899.46$ 3,024.04$ 3,016.19$ 2,993.53$ 3,006.06$ 0.9%
Tax Expense 1,068.17$ 1,207.80$ 1,128.43$ 972.93$ 1,009.75$ 1,003.27$ 999.93$ 1,002.58$
EBIAT 2,068.83$ 2,368.20$ 2,307.57$ 5.6% 1,926.52$ 2,014.29$ 2,012.93$ 1,993.60$ 2,003.47$ 1.0%
% Margin 2% 2% 2% 2% 2% 2% 2% 2%
Depreciation & Amortization 1,948.00$ 2,089.00$ 2,340.00$ 2,520.06$ 2,705.03$ 2,893.70$ 3,086.14$ 3,282.43$
Capital Expenditures (2,831.00)$ (3,349.00)$ (3,699.00)$ (3,329.10)$ (3,329.43)$ (3,396.02)$ (3,463.94)$ (3,533.22)$
Δ Net Working Capital (19.00)$ 66.00$ (478.00)$ 82.05$ (65.43)$ (103.87)$ (103.18)$ 172.72$
Unlevered FCF 1,238.83$ 1,228.20$ 442.57$ 1,171.54$ 1,296.46$ 1,378.73$ 1,484.62$ 1,897.40$
WACC 5.56%
Discount Factor 95% 90% 85% 81% 76%
Present Value 1,109.84$ 1,163.50$ 1,172.16$ 1,195.71$ 1,447.68$
Historical Period Projection Period
Discounted Cash Flow Analysis (KR) (1/2)

31. 31
2021 EBITDA $6,288.49
Exit Multiple 9.0x
Terminal Value $56,596.38
Discount Rate 5.56%
Present Value $43,181.89
Enterprise Value $49,270.77
% of Enterprise Value 76.30%
Implied EV/EBITDA 7.8x
Terminal Value Using Exit Multiple Method
Enterprise Value $49,270.77
Less Total Debt $14,077.00
Plus Cash & Cash Equivalents $322.00
Less Preferred Stock $0.00
Less Non-Controlling Interest $12.00
Implied Equity Value $35,527.77
Shares Outstanding 905.00
Implied Share Price $39.26
Implied Equity Value and Share Price
Discounted Cash Flow Analysis (KR) (2/2)

32. 32
Weight of Debt 40.37%
Cost of debt 4.09%
Tax Rate 33%
Tax-Effected Cost of Debt 1.11%
Weight of Equity 59.63%
Levered Beta 0.97
Risk-Free Rate 2.35%
Expected Market Return 7.60%
Market Risk Premium 5.25%
CAPM 7.46%
Weighted Cost of Equity 4.45%
WACC 5.56%
KR WACC Calculation
Debt
Equity
Comparables
Levered Beta MV of Debt MV of Equity Debt-to-Equity Marginal Tax Rate Unlevered Beta
Costco Wholesale Corporation 0.95 6,659.00 75,660.89 9% 35% 0.90
CVS Health Corporation 0.87 26,657.00 76,101.87 35% 35% 0.71
Sprouts Farmers Market, INC 0.60 384.74 3,255.95 12% 35% 0.56
Target Corporation 0.61 12,749.00 32,544.28 39% 35% 0.49
Walgreens Boots Alliance, INC 1.20 12,935.00 75,818.55 17% 35% 1.08
Wal-Mart Stores, INC. 0.36 45,938.00 300,650.32 15% 35% 0.33
Median 0.74 23% 0.63
Mean 0.76 24% 0.68
Comparable Companies Beta Calculation
Mean Target Marginal
Unlevered Beta Debt-to-Equity Tax Rate Levered Beta
0.68 68% 35% 0.97
The Kroger Company Relevered Beta
WACC (KR)

33. 33
8.0x 8.5x 9.0x 9.5x 10.0x
4.6% $46,343.74 $48,859.66 $51,375.59 $53,891.52 $56,407.45
5.1% $45,394.90 $47,851.53 $50,308.16 $52,764.78 $55,221.41
WACC 5.6% $44,472.78 $46,871.78 $49,270.77 $51,669.77 $54,068.76
6.1% $43,576.50 $45,919.48 $48,262.46 $50,605.43 $52,948.41
6.6% $42,705.22 $44,993.74 $47,282.26 $49,570.78 $51,859.30
Exit Multiple
Enterprise Value
Exit Multiple
8.0x 8.5x 9.0x 9.5x 10.0x
4.6% $32,600.74 $35,116.66 $37,632.59 $40,148.52 $42,664.45
5.1% $31,651.90 $34,108.53 $36,565.16 $39,021.78 $41,478.41
WACC 5.6% $30,729.78 $33,128.78 $35,527.77 $37,926.77 $40,325.76
6.1% $29,833.50 $32,176.48 $34,519.46 $36,862.43 $39,205.41
6.6% $28,962.22 $31,250.74 $33,539.26 $35,827.78 $38,116.30
Implied Equity Value
Exit Multiple
8.0x 8.5x 9.0x 9.5x 10.0x
4.6% $36.02 $38.80 $41.58 $44.36 $47.14
5.1% $34.97 $37.69 $40.40 $43.12 $45.83
WACC 5.6% $33.96 $36.61 $39.26 $41.91 $44.56
6.1% $32.97 $35.55 $38.14 $40.73 $43.32
6.6% $32.00 $34.53 $37.06 $39.59 $42.12
Implied Share Price
Sensitivity Analysis (KR)

34. Merger Consequences Proposal
34

35. 35
Sources
Cash 2,283.0 38%
Equity 0.0 0%
Debt 3,681.8 62%
Total 5,964.8 100%
Uses
Purchase price 5,905.8
Transaction fees 59.1
Retirement of target net debt 0.0
Total 5,964.8
Considerations
Acquirer stock price $22.98
Target stock price $68.56
Purchase premium 0%
Purchase price per share $68.56
Target shares outstanding 86.1
Target purchase price $5,905.8
Interest rate 8%
Tax rate 35%
Cost savings 2%
Sources and Uses of Funds and Assumptions

36. 36
Acquirer Statistics 2017E 2018E 2019E
Revenue 120,009.0 123,725.0 127,221.0
Expenses 114,446.0 117,816.0 121,108.0
Adj. synergies (2,288.9) (2,356.3) (2,422.2)
Total expenses 112,157.1 115,459.7 118,685.8
EBITDA 7,851.9 8,265.3 8,535.2
D&A 2,543.0 2,731.0 2,922.0
Adj. amt. of int. assets 115.1 115.1 115.1
Total D&A 2658.1 2846.1 3037.1
EBIT 5,193.8 5,419.2 5,498.0
Interest 440.0 479.0 422.0
Adj. new debt interest 294.5 294.5 294.5
Total Interest 734.5 773.5 716.5
EBT 4,459.3 4,645.7 4,781.5
Taxes 1,560.7 1,626.0 1,673.5
Net Income 2,898.5 3,019.7 3,108.0
Shares outstanding 940.5 923.0 908.0
Adj. newly issued shares 0.0 0.0 0.0
Total adjusted shares 940.5 923.0 908.0
EPS 3.08 3.27 3.42
EPS acccretion (dilution) 1.38 1.48 1.56
EPS Accretion (dilution) % 81.34% 82.47% 84.19%
Accretion / Dilution

37. 37
Leveraged Buyout (1/2)
Grubhub (NYSE: GRUB)
Leverage Buyout Analysis
($ in millions, except per share data)
Considerations Sources Uses
Target stock price $68.60 Amount % 2016 EBITDA Multiple Purchase price 5,909.20
Purchase premium 0% Bank debt 1,774.53 30% 14.9x Financing fees 56.19
Purchase price per share 68.60 High yield debt 1,183.02 20% 9.9x Transaction fees 59.09
Target diluted shares 86.14 Mezzanine debt 591.51 10% 5.0x Refinanced debt (239.53)
Target purchase price 5,909.20 Equity 2,366.04 40.0% 19.9x Tender/Call premium 130.13
Tax rate 35% Total 5,915.09 100% 49.7x Total 5,915.09
Purchase Multiples Interest Rates Financing Fee/Call premium
Enterprise value 5,669.67 Percent Value Finaning fee Call premium
Implied EV/2016 EBITDA 47.6x Bank debt 4.25% 75.42 Bank debt 1.00% 3.00%
Implied EV/2016 EBIT 67.6x High yeild debt 6.00% 70.98 High yield debt 2.00% 4.00%
Equity Return Statistics Mezzanine debt 9.00% 53.24 Mezzanine debt 2.50% 5.00%
EBITDA Multiple IRR Total Interest 199.63
30.0x 5.73%

38. 38
Leveraged Buyout (2/2)
Kroger (NYSE: KR)
Leverage Buyout Analysis
($ in millions, except per share data)
Considerations Sources Uses
Target stock price $22.98 Amount % 2016 EBITDA Multiple Purchase price 24,216.32
Purchase premium 10% Bank debt 17,328.00 43% 3.0x Financing fees 548.72
Purchase price per share 25.28 High yield debt 11,552.00 29% 2.0x Transaction fees 242.16
Target diluted shares 958.00 Mezzanine debt 5,776.00 14% 1.0x Refinanced debt 13,755.00
Target purchase price 24,216.32 Equity 5,376.93 13% 0.9x Tender/Call premium 1,270.72
Tax rate 35% Total 40,032.93 100% 6.9x Total 40,032.93
Purchase Multiples Interest Rates Financing Fee/Call premium
Enterprise value 37,971.32 Percent Value Finaning fee Call premium
Implied EV/2016 EBITDA 6.6x Bank debt 4.25% 736.44 Bank debt 1.00% 3.00%
Implied EV/2016 EBIT 11.1x High yeild debt 6.00% 693.12 High yield debt 2.00% 4.00%
Equity Return Statistics Mezzanine debt 9.00% 519.84 Mezzanine debt 2.50% 5.00%
EBITDA Multiple IRR Total Interest 1,949.40
6.6x 32.94%

39. 39
Projected Income Statement (Convenience Stores/Gas Stations)
Projected Income Statement
Kroger C-Store and Gas Stations
($ in millions)
CAGR
2016A 2017A 2018E 2019E 2020E 2021E 2022E (2018-2022)
Revenue 3,448.00$ 3,999.68$ 4,779.26$ 5,373.48$ 5,857.10$ 6,149.95$ 6,365.20$ 7.43%
% growth 16% 19% 12% 9% 5% 4%
Operating Expenses 3,301.45$ 3,799.30$ 4,566.98$ 5,039.69$ 5,565.50$ 5,843.78$ 6,048.31$
EBITDA 146.55$ 200.38$ 212.28$ 333.80$ 291.60$ 306.18$ 316.89$ 10.54%
% margin 4% 5% 4% 6% 5% 5% 5%
D&A 18.97$ 40.40$ 80.08$ 127.26$ 82.06$ 86.16$ 89.18$
EBIT 127.58$ 159.99$ 132.20$ 206.53$ 209.54$ 220.01$ 227.71$ 14.56%
% margin 4% 4% 3% 4% 4% 4% 4%
Interest 41.96$ -$ 39.09$ 55.52$ 38.54$ 62.61$ 51.84$
EBT 85.62$ 159.99$ 93.11$ 151.02$ 171.00$ 157.40$ 175.88$
% margin 2% 4% 2% 3% 3% 3% 3%
Taxes 8.62$ 97.37$ 17.99$ 14.72$ 55.22$ 39.77$ 48.61$
Net Income 77.00$ 62.62$ 75.12$ 136.30$ 115.78$ 117.63$ 127.27$ 14.09%
Historical Period Projection Period
EBITDA 200.38$
Multiple 10.36x
Enterprise Value 2,075.98$
Transaction Fees 20.76$
Proceeds 2,055.22$
Purchase Price

40. Secondary Proposal
40

41. Acquisition of Hain Celestial
➢ Acquisition of Garden of Eatin’ in
1998
➢ As one of Hain’s most
successful brands, Garden
of Eatin’ adds significant
growth to Hain Celestial on
a consistent basis
➢ Acquisition of Rudi’s Organic
Bakery in 2014
➢ Expanded Hain’s investment
portfolio to include gluten-
free and organic bread
products
➢ Acquisition of Earth’s Best in 2013
➢ The acquisition of Earth’s
Best in 2013 represented
Hain’s first investment into
the baby and toddler food
industry
➢ Represented first steps to
expansion into a $55 billion
industry
Overview of Hain Celestial
Cost Synergies
International Expansion for Kroger
➢ The Hain Celestial Group is a food processing company specializing in
manufacturing, marketing, and distributing natural organic foods
➢ Hain also carries personal care products, food for infants, and toddler food
➢ Only 51% of revenue generated within U.S. borders
➢ Hain Celestial’s second largest revenue channel is The United Kingdom, which
experienced a 15 percent increase in revenue in 2016
➢ $2.8 billion in revenue in 2016
➢ International revenue amounted to $1.07 billion in 2016
Strategic Acquisition Rationale
41
➢ Kroger’s locations are currently entirely located within the United States,
meaning acquiring a company with an international presence such as Hain
Celestial could significantly ease the process of international expansion
➢ Acquisition of Hain allows Kroger to diversify revenue streams internationally
➢ Hain Celestial provides Kroger with the opportunity to expand their Simple
Truth private organic brand, as well as with their private labels
➢ Kroger is able to create cost synergies by owning brands they currently purchase
➢ Increased distribution channels allow Kroger to efficiently move products
Hain Celestial’s Investments within the Organic
Food Industry