Health & Nutrition Industry 2010 Census                                                         Trends in Mergers and Acqu...
Contents                     Objective of Census . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
Objective of Census           Provide for market participants a Census of M&A activity and           trends in the sub-seg...
Executive SummaryM&A Transactions                                                                                        o...
Executive Summary (cont’d)       with an increase of 46% above 2009 and the                                               ...
Executive Summary (cont’d)       A significant factor against this backdrop is that                                       ...
Executive Summary (cont’d)       Yoplait, evidenced by ongoing bids by Lactalis,                                          ...
Executive Summary (cont’d)       increased availability of debt and a build-up of                                         ...
Executive Summary (cont’d)       Gluten-free is being viewed by the consumer as a                                         ...
Sub-Segment Analysis and Commentary  Health & Nutrition focuses on those “sub-segments” at the intersection of the  giant ...
Sub-Segment Analysis and Commentary                                                  Number of Transactions               ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and BeveragesDairy and Probiotic transactio...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages  Dairy and Probiotic transact...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis               Healthy, Natural, Organic, Functional Foods and Beverages                              ...
Sub-Segment Analysis                                       Health and Nutrition Ingredients Suppliers  DSM expands its rea...
Sub-Segment Analysis                                       Health and Nutrition Ingredients Suppliers                     ...
Sub-Segment Analysis                                       Health and Nutrition Ingredients Suppliers                     ...
Sub-Segment Analysis                                       Health and Nutrition Ingredients Suppliers                     ...
Sub-Segment Analysis                                        Health and Nutrition Ingredients Suppliers                    ...
Sub-Segment Analysis                                                                   Contract Manufacturers        SunOp...
Sub-Segment Analysis                                                                   Contract Manufacturers             ...
Sub-Segment Analysis                                                                   Contract Manufacturers             ...
Sub-Segment Analysis                                                     Branded Nutritional Supplements  The return of Pr...
Sub-Segment Analysis                                                   Branded Nutritional Supplements                    ...
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions
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Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions

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Reflective of stronger-than-expected 2010 year-end economic growth, M&A activity continued its substantial rebound for the year.

With improving equity markets and the return of the large strategics, transaction activity in the health & nutrition sector, led by the natural/organic food & beverage segment, outpaced the peak of 2006.

I will be pleased to respond to questions arising from the Census and may be contacted at 773-693-4800 or mgalante@jhchapman.com

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Health & Nutrition Industry 2010 Census - Trends in Mergers & Acquisitions

  1. 1. Health & Nutrition Industry 2010 Census Trends in Mergers and Acquisitions Marco V. Galante, Principal Marco V. Galante, Principal J.H. Chapman Group, L.L.C. J.H. Chapman Group, L.L.C. 773-693-4800 773-693-4800 mgalante@jhchapman.com mgalante@jhchapman.com ©2011 J.H. Chapman Group, L.L.C.This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  2. 2. Contents Objective of Census . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Sub-Segment Analysis and Commentary .................................... 10 Healthy, natural, organic, functional foods and beverages . . . . . . . . . . . . . . . . . . 12 Health and nutrition ingredients suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Contract manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Branded nutritional supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 OTC and natural personal care products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Licensing and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Retailers and distributors of these products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Conventional ingredients suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Recent Financings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 J.H. Chapman Group, L.L.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 J.H. Chapman Group, L.L.C. makes no representation as to the accuracy and completeness of the information provided. The information in this presentation is obtained from various public sources. In the listings of Acquirers and Targets, the columns are blank if amounts are unavailable. Please do not reproduce it for third parties, but notify us of others who would like to receive it and we will contact them directly. ©2011 J.H. Chapman Group, L.L.C. 2This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  3. 3. Objective of Census Provide for market participants a Census of M&A activity and trends in the sub-segment of their industry, within the $5 million to $100 million transaction value range. Identify, where applicable, future trends that are likely to have an influence on transaction activity and valuations. ©2011 J.H. Chapman Group, L.L.C. 3This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  4. 4. Executive SummaryM&A Transactions on strategic transactions supporting acquirers’ core directions not just for growth, but also to increaseWithin the total of the food industry, 2010 M&A trans- their product and application offering and to expandactions increased by 20% over the previous year, with their share of the market. Many larger companiesthe “Food Processor” category providing the single (such as Elan Nutrition, Garden of Life, Tree oflargest increase and more dairy activity than usual. Life, Balance Bar, and Airborne) acquired small toTransactions were buoyed by acquisitions such as medium sized companies.Kraft’s winning battle to acquire Cadbury and NBTY’s In the health and nutrition category, there were aacquisition by Carlyle. Overall, corporate strategics total of 87 transactions in 2010 (excludingand financial sponsors continued to be active. licensing, joint ventures, financing, retail andThe Monday, January 10, 2011 announcement of distribution), an increase of 72% over 2009 and aDuPont’s acquisition of Danisco, for a transaction substantial increase of 23% over the peak of 2006.value of $6.3 billion, may be a sign that the multi- The organic/natural food and beverage sector wasbillion M&A activity that has taken place in the the largest contributor, at 48% of the total, followednutritional ingredients market over the last several by health and nutrition ingredients suppliers atmonths is continuing in 2011. 20%.The subsequent information provides a synopsis of There is a significant resurgence of licensing andM&A activity in the health and nutrition sector, joint ventures. Although lower than 2009, this trendfollowed by the statistics for each identified segment. is a strong indicator of continuing alternative strategic options for companies seeking growth. Health and Nutrition Organic and Functional Food & Beverage A distinct rebound in M&A took place in 2010, with most transactions in the natural, organic and This category continues to be the largest M&A functional foods sectors of the industry. Focus was contributor accounting for 48% of the transactions, ©2011 J.H. Chapman Group, L.L.C. 4This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  5. 5. Executive Summary (cont’d) with an increase of 46% above 2009 and the Financing highest number of transactions since 2006. There has been some recent easing of the capital Health and Nutrition Ingredients Suppliers markets, and 2010 financings (47) compare to 2009 (44). More bank credit is becoming As the second largest transaction contributor, this available at attractive interest rates. category was 142% higher than in 2009, and almost on par with the average annual number of Economic and Market Environment in 2010 transactions during 2006 through 2008. The U.S. Economy Branded Nutritional Supplements The year 2010 began and ended well! Despite Transactions in 2010 were 85% higher than in certain volatility, growth in financial markets 2009, and the 2010 total was almost equivalent to exceeded expectations at the beginning of the the average transaction numbers during 2006 year, then the economy relapsed in mid-year, but through 2008. substantially recovered by year-end with stronger- than-expected growth for the year as a whole. Licensing & Joint Ventures While the recovery now in progress is not yet The second half of 2010 saw a significant much cause for cheer, the country enters 2011 resurgence of licensing and joint ventures – a total with an improved economic and financial of 40 transactions. Although 23% lower than the situation despite continuing weak consumer 52 in 2009, this is a continuing strong indicator confidence, the housing trouble spot and that companies seeking growth are pursuing unemployment continuing at a rate of 9.8%. means in addition to traditional M&A. ©2011 J.H. Chapman Group, L.L.C. 5This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  6. 6. Executive Summary (cont’d) A significant factor against this backdrop is that cash reserves and strong balance sheets, better food manufacturers are facing considerable and availability of credit at attractive rates and increasing pressure from rising commodity prices, potentially lower valuations. which are making an impact on margins that are being squeezed as consumers continue to resist Acquirers are focused on strategic transactions price increases. that support their core directions and are likely to produce measurably improved results. North American M&A Activity Acquisitions are expected to build the “bottom M&A and investment activity is on the upswing line” with a good return on the invested capital. as evidenced by the return of the large strategic Examples include: acquirers that, having experienced low organic • Brazil – JBS’ acquisition of Pilgrim’s Pride, growth due to the recessionary environment, are and Mafrig Food’s acquisition of Keystone, pursuing acquisitions aimed at bolstering low the largest privately held meat products growth rates. With rebounding stock prices and company. substantial cash reserves, those strategics • Mexico – Group Bimbo’s acquisition of consummated a large number of transactions. Sara Lee’s bakery operation, and Sigma Kraft’s acquisition of Cadbury and Pepsico’s Alimentos’ purchase of Bar S Foods. purchase of Russian dairy, baby food and juice processor Wimm-Bill-Dan are but two examples. • Europe – Ebro’s sale of its dairy business to Lactalis, and Arla’s merger with German Global M&A Activity Hausa-Milch. Cross-border M&A soared in 2010 and will be a A strong indicator of heightening activity in 2011 major activity again in 2011. Forces fostering the is the interest expressed in PAI Partners’ stake in surge include leaner enterprises with substantial ©2011 J.H. Chapman Group, L.L.C. 6This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  7. 7. Executive Summary (cont’d) Yoplait, evidenced by ongoing bids by Lactalis, Private Equity Groups (PEGs) Nestle, General Mills, Pepsico and others. Current financing terms at low interest rates make Emerging Markets for challenging investing, even in a slow growth environment. Capital is still restrictive, but U.S. companies appear to be the most popular available for transactions where borrowers have market suitors for emerging market bidders demonstrated outstanding fundamentals, including China. In turn, U.S. companies are consistent earnings, a capital structure that does seeking to expand their global presence, not over-leverage the company and a meaningful particularly in India, while Indian midmarket to amount of equity. large size companies are leveraging their financial strength to aggressively access overseas markets. With tempered market growth and minimum equity contributions in excess of 40%, it will Examples of Indian M&A activity in the U.S. become difficult to expect annual investment include: returns above 20% at “reasonable” purchase • Cambrex Corporation’s acquisition of prices. Hence PEGs’ increased holding period the Genera Pharmaceuticals for $20 million past few years because of their inability to exit • Norwest Venture’s investment in Tutor investments. Vista These points notwithstanding, PEGs were very • Zensar Technologies’ $66 million acquisi- active as buyers and sellers alike in 2010 where tion of Akibia the B2B products and services industry sector • Dr. Reddy’s acquisition of accounted for approximately one-third of their GlaxoSmithkline’s U.S. oral penicillin total transactions, with B2C products and services facility and product portfolio providing the largest increase. • Dabur India’s $100 million acquisition of Data for 2010 shows renewed interest in large U.S.-based Namaste Laboratories and its transactions, including those made possible by three subsidiaries. ©2011 J.H. Chapman Group, L.L.C. 7This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  8. 8. Executive Summary (cont’d) increased availability of debt and a build-up of vegetables have increased, albeit at a much lower capital in PE investor funds. Equally, PE investors rate, than that of other commodities. have displayed a larger appetite for the Food and Beverage Industry sector than in prior years. Food Safety Active investors have included KPS Capital The recently legislated food safety measures will Partners, Wind Point Partners, Catterton Partners have an impact on the operation of food and Mistral Equity Partners. processors and distributors, with consequences on Raw Materials and Food Prices the bottom line. Climate change, mixed harvest results, rising Market Trends and the Consumer populations and scarcity of arable land are just a All-Natural Food and Beverage few factors that will continue to impact the costs of raw materials, placing increasing price In addition to consumers’ growing use of products pressures on manufacturers and retailers in the with healthy attributes, they are also seeking a years ahead. wider range of products made with all-natural ingredients. A number of major food and beverage Given recent historically low food prices, price manufacturers have indicated that they will offer increases need to be viewed on a relative basis. an increased number of all-natural products. An However, consumers are paying up to 55% more indicator of this trend is PepsiCo’s recent for some basic items than three years ago. Corn announcement that in 2011, 50% of their Frito- prices have increased 45% in the last three Lay products will be made from all-natural months. Soybeans, coffee, cocoa and others have ingredients. also increased substantially. While there is volatility, the global trend is definitely upward. Other Trends Include: Snacks are becoming more functional, giving On a year-over-year basis, prices of staples such snacks a nutritional edge. as bread, eggs, meat and even fruits and ©2011 J.H. Chapman Group, L.L.C. 8This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  9. 9. Executive Summary (cont’d) Gluten-free is being viewed by the consumer as a consumers attempt to adopt behaviors that healthy alternative. improve their health and avoid diseases. Non-GMO is set to become the hot new label. Given the growing role and importance of The Consumer nutraceuticals, it is likely that an increased number of pharmaceutical companies will become Economic-driven necessities have impacted participants in the functional ingredients sector, consumers’ behavior and forced “adaptability,” driven by the convergence of food and pharma for creating behavior changes that are likely to remain personalized health and nutrition. for the foreseeable future – by and large consumers now think defensively. Their choices In keeping with these developments, Nestle has will be different and driven by “sales,” special passed on some of the bigger food industry trans- offers, promotions and discounts, and not actions to specifically invest in its own nutrition necessarily just by brands or store choice. unit with the singular objective of becoming the leader in health science and nutrition. People are working beyond retirement – either due to financial need or because they have This trend is further reinforced in Europe by the become accustomed to a particular lifestyle. EIB’s (European Investment Bank) financing to Danisco and Novozyme to support research, Current unemployment rates notwithstanding, development and innovation in the area of enzyme continuing and increased penetration of automated applications and other health-focused ingredients. technology will inevitably replace workers – for better or worse. Consequently, 2011 may see certain jobs permanently displaced by technology. The market for healthy/functional foods and dietary supplements will see significant growth as ©2011 J.H. Chapman Group, L.L.C. 9This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  10. 10. Sub-Segment Analysis and Commentary Health & Nutrition focuses on those “sub-segments” at the intersection of the giant healthcare, personal care and food industries. Personal Care Natural Personal Care Healthcare Nutritional Supplements Ingredients Suppliers Functional OTC Foods Natural and Food Pharmaceuticals Organic Foods ©2011 J.H. Chapman Group, L.L.C. 10This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  11. 11. Sub-Segment Analysis and Commentary Number of Transactions Number of Transactions Segme nt 2006 2007 2008 2009 2010 Healthy, Natural, Organic and Functional Foods and Beverages 25 22 24 29 42 Health and Nutrition Ingredients Suppliers 21 20 17 7 17 Contract Manufacturers 3 2 4 3 7 Branded Nutritional Supplements 14 12 14 7 13 OTC & Natural Personal Care Products 7 6 2 5 8 Total 70 62 61 51 87 Licensing and Joint Ventures (Started in 2008) NA NA 21 52 42 Retailers and Distribution 13 12 6 2 8 Financings 25 19 23 44 47 ©2011 J.H. Chapman Group, L.L.C. 11This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  12. 12. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and BeveragesDairy and Probiotic transactions dominate second half of 2010 ©2011 J.H. Chapman Group, L.L.C. 12This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  13. 13. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Dairy and Probiotic transactions dominate second half of 2010 French conglomerate Groupe Danone acquired 51% of ProViva, a Swedish probiotic digestive health brand. ProViva has sales in excess of $50 million. In addition to its equity participation, Danone secured a 10-year global license agreement with the inventors. Eyeing the frozen yogurt market, Danone announced their acquisition of one of the leading frozen yogurt manufacturers, YoCream for approximately $103 million. The Hain Celestial Group entered the yogurt market with their acquisition of 3 Greek Gods, makers of authentic Greek-style products. With sales of approximately $10 million in 2009, 3 Greek Gods’ yogurt is thicker and creamier than standard yogurt and fits squarely into Hain’s portfolio of natural and ethnic brands. Acquired by Dean Foods in 1999, UK-based Rachel’s Yogurt, was sold to French dairy producer Groupe Lactalis in August 2010. Established in 1966, Rachel’s is a premium brand and the second largest organic dairy brand in the UK. In their second divestiture in 6 months, Dean Foods sold Mountain High Yogurt business and Mountain High brands to General Mills. Mountain High will become part of General Mills’ Yoplait USA division and continue to operate under the Mountain High name. Yoplait acquired Canadian-based yogurt-maker, Liberte from Swander Pace Capital, Roynat Capital and the management team. Liberte is Canada’s leading natural and organic yogurt brand. Goat cheese company, Cypress Grove Chevre (based in Arcata, CA) was acquired by Emmi Holding (USA), Inc. a division of Emmi, founded as a dairy owned cooperative in 1907, the largest milk processor in Switzerland. ©2011 J.H. Chapman Group, L.L.C. 13This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  14. 14. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans. Sales Multiple of EBITDA Multiple of 2010 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) W estern European Sunny Delight juice Dec. Orangina Schweppes drink Dec. Meyer Natural Foods Dakota Beef Dec. High Road Capital Partners Panos Brands 22.0 Dec. Yoplait Liberté 175.0 Dec. New Image Group Somnaceutics Nov. General Mills Mountain High Yoghurt Nov. W eston Foods Ace Bakery 110.0 Nov. Danone YoCream International 103.0 Nov. Umami Sustainable Seafood Baja Aqua Farms Sept. Lactalis Ebros dairy business Aug. Emmi Cypress Grove Chèvre 10.0 Aug. Usana Health Sciences BabyCare Limited 62.7 15.0 4.2 Aug. Cott Corporation Cliffstar 569.0 100.0 5.7 Aug. Lactalis Rachels Yogurt Aug. Lion Capital Picard Surgele 1970.0 1440.0 1.4 Aug. Nestle Vitaflo 42.0 Aug. SAIF Partners Huiyuan Juice Aug. Danone Proviva 50.0 July Gertrude Hawk Chocolates Drews All Natural July T he Hain Celestial Group 3 Greek Gods 10.0 June Heart Health Blue Gold Beverages Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 14This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  15. 15. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans. 2010 Sales Multiple of EBITDA Multiple of Acquirer Target Value (Contd) (US $M) Sales (US $M) EBITDA (US $M) June Darwin Private Equity Plum Baby 15.0 22.0 0.7 June Danone Unimilk June Hain Celestial Group Churchill Food Products Ltd. May Hearthside Food Solutions Golden Temple (Cereal Division) May Coffee Holding Co. Inc. Organic Products Trading Company May Hain Celestial Group W orld Gourmet May Empire Kosher Kosher Valley April E&A Industries Udis Healthy Foods April Coca Cola Innocent April China Haisheng Juice Holdings Yitian Group April Sweet Tea Leaf Tradewinds Beverage March Mach One W hite Hat Brands March T reeHouse Foods Sturm Foods 660.0 340.0 1.9 March Fresh Harvest Products, Inc. AC La Rocco Pizza 1.5 Feb. Kore Go All In Feb. North Castle Partners Flatout, Inc. Feb. Raisio Glisten 29.7 Feb. Diamond Foods Kettle Foods 615.0 250.0 2.5 Jan. Malt-O-Meal Farina Mills Brand Jan. Shashi Foods MJs Fine Foods Specialty Foods Indias healthcare nutrition Jan. Nestle India 6.3 business Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 15This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  16. 16. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans. Sales Multiple of EBITDA Multiple of 2009 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Dec. DS Waters Owaters LLC Dec. Attune Foods Uncle Sam and Erewhon brands Dec. Danone Danone Clover Nov. Brynwood Partners VI L.P. Balance Bar Company (from Kraft Foods) Oct. Hain Celestial Group Infinitea Kombucha Oct. Food Collective Helens Kitchen and Organic Bistro Sept. Pulmuone Monterey Gourmet Foods Sept. Full Motion Beverage Performaxx Brands, Inc (Energize Brand) Aug. Full Motion Beverage Mojava Aug. AMI Brands Embodi Aug. Pepsico Amacoco Aug. Foster Farms Dairy Humboldt Creamery July Skinny Nutritional Corp. "Skinny" Trademarks June Fresh Harvest Products Organic Chef June Renaissance Food Group Really Cool Food Company June Beverages Holdings LLC Bossa Nova June Dean Foods Alpro 458.0 366.0 1.3 June Dinewise Home Bistro June Nutrition Solutions (Atkins) Bora Bora April Swander Pace Applegate Farms BAZZA High-Energy Tea trademark from March BYB Brands, Inc. Cooper Tea Company Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 16This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  17. 17. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans.2009 Sales Multiple of EBITDA Multiple of Acquirer Target Value (Contd) (US $M) Sales (US $M) EBITDA (US $M) Feb. Andromeda Acquisition Corp. Galaxy Nutritional Foods, Inc. 6.8 24.8 0.3 1.2 5.7 Feb. Lifeway Foods Fresh Made Dairy 14.0 10.0 1.4 Feb. M&K Acquisitions Gleukos, Inc. Feb. Nest Collective Plum Organics Frucor Beverages Group Ltd (from Groupe Feb. Suntory 775.0 270.0 2.9 Danone SA) Jan. Otsuka Pharmaceuticals Nutrition & Santé Jan. Hilco Equity Partners Niman Ranch 47.8 Jan. T ivall (a division of Osem Group) Foodtech International 20.0 Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 17This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  18. 18. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans. Sales Multiple of EBITDA Multiple of 2008 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Oct. Osem Group Tribe Mediterranean Foods 57.0 32.0 1.8 Oct. Pepsico Spitz International Company Sept. Green Mountain Coffee Roasters Tullys 40.0 30.4 1.3 Sept. Ians Natural Foods Inc. Healthy Handfuls LLC Aug. Aventura Equities Inc. Byers Food Inc. Aug. Promax Nutrition Corp. Pure of Holland LLC Aug. SunOpta Pure Nature Organics July W essanen So Good 11.7 July Olympus Partners Anns House of Nuts Inc. July Campbell Soup Co. Country Gourmet Foods June General Mills Humm Foods June Meyer Natural Angus Coleman Natural Foods May Pepsico V Water April SunOpta Tradin Organics 120.0 April T he Hain Celestial Group Daily Bread, Ltd. April T SG Consumer Partners MonaVie March Natures Products Inc. Champion Nutrition March T he Hain Celestial Group MaraNatha and SunSpire Brands 40.0 Pilgrims Pride Corporation (Turkey March T he Hain Celestial Group Operation) Feb. Coca-Cola Honest Tea Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 18This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  19. 19. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans.2008 Sales Multiple of EBITDA Multiple of Acquirer Target Value (Contd) (US $M) Sales (US $M) EBITDA (US $M) Feb. Coca-Cola NutriJoy Inc. Feb. Robertet Group Plantes Aromatiques du Diois 8th Continent (A General Mills and Dupont Feb. Stremicks Heritage Foods JV) Jan. Meyer Natural Angus Lauras Lean Beef Co. 150.0 Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 19This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  20. 20. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans. Sales Multiple of EBITDA Multiple of 2007 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) W holesome and Hearty Foods Company Nov. Kelloggs (Gardenburger brand) Nov. Kelloggs Bear Naked 20.0 Oct. Amish Naturals Schlabach Amish Wholesale Bakery Oct. Amish Naturals Prima Pasta Oct. Clearlight Partners Apple and Eve Zero Debt Bottling Corp. (a.k.a. 505 Aug. Creo Capital Partners Southwestern) Aug. T he Hain Celestial Group Plainville T urkey Farm 30.0 July ConAgra Alexia Foods 35.0 July Nestle Novartis Medical Nutrition 2500.0 Vialat (70% of its fresh dairy activity in May Group DANONE Chile) May Clearly Canadian Beverage Corp. My Organic Baby 2.5 May Coca Cola Glaceau 4100.0 355.0 11.5 May T he Hain Celestial Group Tofu Business of WhiteWave Foods March Integrated Biopharma BevSpec (Syzmo Brand) Feb. Clearly Canadian Beverage Corp. DMR Food Corporation Feb. Rich Products GLP Free Manufacturing Susquehanna International Group Feb. U.S. Mills (SIG) Investments Jan. Coca Cola Fuze Beverage Jan. Catterton Partners CoolBrands Dairy, Inc. Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 20This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  21. 21. Sub-Segment Analysis Healthy, Natural, Organic, Functional Foods and Beverages Trans. 2007 Sales Multiple of EBITDA Multiple of Acquirer Target Value (Contd) (US $M) Sales (US $M) EBITDA (US $M) Eskimo Pie, Chipwich brands, Real Fruit Jan. Dreyers Grand Ice Cream trademark and Eskimo Pie foodservice business (Coolbrands) Jan. Health Sciences Group Kalahari Tea Jan. ICBS DNA Distribution (maker of GO-JI Plus) Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 21This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  22. 22. Sub-Segment Analysis Health and Nutrition Ingredients Suppliers DSM expands its reach in natural products After a nearly 2-year hiatus from the health and nutrition sector, DSM returned, acquiring two companies in the sector in the last four months of 2010, focusing in on higher value nutritional ingredients as opposed to low-margin bulk chemicals. In September 2010, DSM acquired Microbia from Ironwood Pharmaceuticals. Microbia claims that it has developed a technology platform that enables it to produce high- quality, natural carotenoids (including ß-carotene and canthaxanthin), nutritional products and other specialty materials and chemicals from renewable resources. On the heels of this acquisition, DSM acquired Martek Biosciences for $1.5 billion. With $450 million of annual revenue and 600 employees, Martek offers fatty acids and nutrition ingredients to companies including baby-formula maker Mead Johnson Nutrition Co. and Kellogg Co. The company, in its efforts to move beyond infant Omega 3 nutrition, acquired supplement manufacturer, Amerifit in early 2010. Omega 3 companies Trygg Pharma AS, a company jointly owned by Aker BioMarine ASA, a Norwegian biotechnology company, and Lindsay Goldberg, a New York-based investment fund, acquired all of the shares in EPAX AS from Austevoll Seafood ASA. EPAX AS is a leading supplier of concentrated, marine- derived omega-3 formulas. Expanding beyond protein products and omega-3 fish oil, Omega Protein acquired Cyvex Nutrition, suppliers and marketers of premium branded ingredients to dietary supplement manufacturers. ©2011 J.H. Chapman Group, L.L.C. 22This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  23. 23. Sub-Segment Analysis Health and Nutrition Ingredients Suppliers Trans. Sales Multiple of EBITDA Multiple of 2010 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Dec. DSM Martek 1087.0 450.0 2.4 Dec. Omega Protein Cyvex Nutrition Sept. DSM Microbia Sept. Solbar Green Planet Farms 7.8 Martek Biosciences manufacturing plant in Sept. Alltech 14.0 W inchester, KY Aug. T rygg Pharma AS EPAX AS 91.0 51.2 1.8 July Marco Hi-Tech Reducol Assets (from Forbes Medi-tech) June Novus International IQF Group June BASF Cognis 3833.0 3215.0 1.2 450.0 8.5 May Viterra 21st Century Grain Processing 90.5 March Lallemand Health Ingredients Lal’Food March H2 Equity Partners Kirin Agribio Company Nutra Cea (Natural Glo, Satin Finish, and March Manna Pro Products 0.7 Max-E-Glo Brands and Trademarks) March Institut Rosell-Lallemand DSM (LAFTI range of probiotic strains) NutraCeas cereal ingredient Feb. Kerry Group 4.0 business Albion Laboratories, Inc. (Animal Nutrition Feb. Novus International Division) Jan. Kemin Industries Soda Feed Ingredients Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 23This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  24. 24. Sub-Segment Analysis Health and Nutrition Ingredients Suppliers Trans. Sales Multiple of EBITDA Multiple of 2009 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Nov. Symrise (Germany) Futura Labs Oct. Advitech Botaneco Sept. Qualsec Vitamin Spice Aug. Naturex Natraceutical March Burgundy Botanical Cognis botanicals extract business Feb. Mach One Corporation Ceres Organic Harvest 8.0 20.0 0.4 Jan. Chr. Hansen Urex Biotech Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 24This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  25. 25. Sub-Segment Analysis Health and Nutrition Ingredients Suppliers Trans. Sales Multiple of EBITDA Multiple of 2008 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Nov. Biorigin PTX Food Corp. Oct. Danisco GraceLink Ltd. (Glucagel brand) Sept. RFI Ingredients W ilsey and Sons Qufu Shengwang Stevia Biology and Sept. Sunwin International Neutraceuticals Science Company Aug. DSM Provexis (30% purchased) 2.0 Aug. Glanbia Optimum Nutrition 315.0 185.0 1.7 July Besins Healthcare S.A. Olympian Labs July Dynova Laboratories SiCap Industries July Rousselot PEPTAN June All American Pharmaceutical Laurel Dairy May Premium Ingredients International Bulk Pharmaceuticals Inc. April Iranex Group Bio-Serae 11.0 March Cognis InterMed Discovery March NutraCea Irgovel 14.0 Feb. Barentz Europe Vitablend Holding Jan. Eurogerm Leag 5.8 Jan. Naturex Berkems "Actifs Innovants" division 14.0 5.6 2.5 Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 25This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  26. 26. Sub-Segment Analysis Health and Nutrition Ingredients Suppliers Trans. Sales Multiple of EBITDA Multiple of 2007 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Dec. Chr. Hansen Medipharm Dec. Natrol, Inc. Plethico Pharmaceuticals Limited 81.0 Dec. Naturex Chart Corporation Nov. Frutarom RAD Technologies 4.1 1.5 2.7 Tat Nisasta (Galam and Tat Nisasta, a Turkish starch, glucose and isoglucose manufacturer, have Nov. Galam formed a partnership to meet the increasing global demand for fructose) Oct. Galam Group Atomer S.L. Oct. Novozymes Biocons enzyme business 115.0 27.0 4.2 Pizzeys Milling (Omega 3 ingredient Sept. Glanbia business) Sept. Natraceutical Cevena Bioproducts 2.8 July Avesthagen Renaissance Herbs May Gadot Biochemical Industries Ltd. Pharmline Holding Inc. (85%) 37.0 May Lonza S.A.M. Electron Technologies First Israeli Turnaround Enterprise May Solbar (51% stake) 19.6 Fund May Naturex HP Botanicals 3.0 3.8 0.8 MDB Twello BV (operates under the name April Barentz Europe Fa. L.I. Frank - Fa. Wed. W. Miedendorp) Chinook Group Limited (certain choline March Balchem Corporation chloride business assets) Tempo Canada (expansion of strategic Feb. Lipid Nutrition partnership) Feb. Univars Czech Ekozym Jan. Naturex Hammer Pharma 13.0 10.1 1.3 1.2 11.2 Jan. Polifenoles Naturales National Bioscience Corp 26 ©2011 J.H. Chapman Group, L.L.C.This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient withoutWhere available, data isChapman Group. permission from the J.H. b eing provided.
  27. 27. Sub-Segment Analysis Contract Manufacturers SunOpta returns • SunOpta, a producer and distributor of natural food products, acquired Edner of Nevada, a maker of fruit snack bars. The fourth quarter of 2010 marks the return of SunOpta as an active acquirer of ingredient companies and related business, after a relatively quiet period since the beginning of 2008 when the company was faced with a class action lawsuit over mis-stated inventories in its berry operations. Interest in South Africa • Netherlands-based Danisco announced their acquisition of Research Solutions, a South African company known for their expertise in customized ingredient solutions, particularly in dairy. This marks the second transaction in South African’s health and nutrition industry in the last 12 months. In December 2009, SunOpta entered into a Joint Venture with Specialized Protein Products, a South African-based soymilk/soy powder manufacturer. Edner of Nevada ©2011 J.H. Chapman Group, L.L.C. 27This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  28. 28. Sub-Segment Analysis Contract Manufacturers Trans. Sales Multiple of EBITDA Multiple of 2010 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Nov. SunOpta Edner of Nevada 4 10 0.4 Nov. UAS Labs APN Labs Aug. Danisco Research Solutions July National Enzyme Company Sora Laboratories April Pharmachem AmeriFill April ConAgra Elan Nutrition April Milk Specialties Global Protient’s Dairy Processing Facility Trans. Sales Multiple of EBITDA Multiple of 2009 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Aug. Herbalife Micelle Laboratories Acquired two additional gelatin production April CapsCanada facilities March Milk Specialties Global Edan Naturals Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 28This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  29. 29. Sub-Segment Analysis Contract Manufacturers Trans. Sales Multiple of EBITDA Multiple of 2008 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Nov. Joshua Partners LLC Medicia Holdings LLC MSC Animal Nutrition (A division of Oct. Manufacturing Facility Milk Specialties Global) Sep. Perrigo JB Laboratories 44.0 70.0 0.6 Jul. Probio Gelkaps Trans. Sales Multiple of EBITDA Multiple of 2007 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Jan. Atrium Biotechnologies Inc. AquaCap Pharmaceutical, Inc. 21.5 3.6 6.0 T he Qualicaps Group (The Carlyle Jan. Pharmaphil, Inc. Group) Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 29This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  30. 30. Sub-Segment Analysis Branded Nutritional Supplements The return of Private Equity Groups (PEGs) The Carlyle Group re-entered the health and nutrition sector with its acquisition of NBTY. In 2005, the global alternative asset management firm acquired Chinese contract manufacturer Shionogi Qualicaps Group, and through that portfolio company acquired Pharmaphil in 2007. NBTY makes nutritional supplements and vitamins under the brands Nature’s Bounty, Vitamin World, and others. Atkins Nutritionals, a portfolio company of North Castle Partners, was acquired by Roark Capital Group, an Atlanta-based private equity firm. Roark has a focus on consumer products, direct marketing and retail. Their previous investments include Pet Valu, Seattle’s Best Coffee, Aunt Anne’s and Moe’s Southwest Grille. Levine Leichtman Capital Partners (LLCP) announced that it has partnered with management in its acquisition of Santa Cruz Nutritionals, a leading manufacturer of gummy-based nutritional products and dietary supplements from Swander Pace. Swander Pace acquired Santa Cruz Nutritionals as part of the Harmony Foods buyout, and sold the Harmony Foods Retail division to Diamond Foods in 2006. LLCP’s previous consumer and retail investments include Quizno’s, Cici’s Pizza and Overhill Farms. ©2011 J.H. Chapman Group, L.L.C. 30This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.
  31. 31. Sub-Segment Analysis Branded Nutritional Supplements Trans. Sales Multiple of EBITDA Multiple of 2010 Acquirer Target Value (US $M) Sales (US $M) EBITDA (US $M) Dec. Atkins Nutritionals Roark Capital Group 170.0 Dec. Atrium Innovations Inc. Minami Nutrition 7.4 6.7 1.1 1.3 5.5 Dec. GlaxoSmithKline Maxinutrition Group Holdings 250.0 56.0 4.5 Nov. Levine Leichtman Capital Partners Santa Cruz Nutritionals Cataline LifeSciences (Bariatric Aug. Metagenics Advantage) July Carlyle Group NBTY 4000.0 2600.0 1.5 500.0 8.0 June T horne Research Diversified Natural Products June Danone Medical Nutrition 62.0 16.0 3.9 May Vitacyclix, LLC Freeman Industries April Baird Capital Partners New Vitality March Atrium Innovations Trophic Canada 11.0 7.5 1.5 Jan. International Vitamin Corporation Inverness Medical Innovations 63.4 Jan. Martek Amerifit Nutrition Inc. 200.0 Where available, data is b eing provided. ©2011 J.H. Chapman Group, L.L.C. 31This document contains proprietary and confidential information of J.H. Chapman Group and may not be distributed or discussed beyond the original recipient without permission from the J.H. Chapman Group.

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