food & beverage mergers & acquisitions update q1 2020 and beverage … · calavo growers,...

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FOOD & BEVERAGE MERGERS &

ACQUISITIONS UPDATE

Q1 2020

BKD CAPITAL ADVISORS CHICAGO | DALLAS | DENVER | INDIANAPOLIS | SPRINGFIELD

Mid-Atlantic Region

OVERVIEW & OUTLOOK

The food and beverage industry began the first quarter with strong M&A activity and expectations among deal makers that the positive deal environment would continue throughout 2020. However, due to the effects of the SARS-CoV-2 virus and the incidence of COVID-19 (COVID-19), the quarter ended with unprecedented uncertainty. While the full impact of COVID-19 remains unknown, the outbreak has led to a dramatic slowdown in overall M&A activity. Even though much of the food & beverage industry falls into the essential business category during lockdown and stay-at-home orders, it has not been spared by the effects of the pandemic. While some businesses such as nonperishable and processed food companies are seeing an increase in sales as customers are either by choice or by lockdown orders stocking up and eating at home, others, such as retail food establishments and restaurants are facing challenges with a shortage of food supplies, employees and consumer demand.

Throughout Q1, many transactions that were underway or close to completion moved toward closing, while a high proportion of deals in the early stages were paused in a “wait-and-see” approach. As reflected in the chart below, the number of deals completed in Q1 2020 closely reflected numbers seen in Q1 2019. However, we expect a significant decline in Q2 year-over-year transactional volumes. Notable transactions in the food and beverage category during the first quarter include the acquisition of Rockstar, Inc. by PepsiCo, Inc. for $3.85 billion and the acquisition of Fairlife, LLC by The Coca-Cola Company for $1 billion. Also of note was the sale of Dean Foods, America’s largest milk producer, to Dairy Farmers of America for $425 million.

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FOOD & BEVERAGE M&A

Food & Beverage Total Deals 2008–Q1 2020

242

187

251275 283 278

310326 335

366339

363

86 93

Source: S&P Capital IQ

BKD CAPITAL ADVISORS SERVICES

▪ Company Sales & Divestitures ▪ Management Buyouts

▪ Debt & Equity Recapitalizations▪ Succession Planning & Strategic

Options Analysis

▪ Mergers & Acquisitions ▪ Affiliations


Mid-Atlantic Region

TRANSACTION ACTIVITY

BKD CAPITAL ADVISORS SERVICES

bkdcapitaladvisors.comSource: S&P Capital IQ

FOOD & BEVERAGE M&A

Most Active Strategic Buyers2018–Q1 2020

Most Active Private Equity Buyers2018–Q1 2020

6

10

6

9

19

4

13

9

16

17

Produce, Ingredients &Co-Packers

Non-AlcoholicBeverages

Dairy & Protein

CPG Foods

Alcoholic Beverages

Q1 2020 Q1 2019

10%

90%

Private

Equity

Strategic

Number of Deals by Segment Q1 2020 Deals by Buyer Type

Investment

Date

Target

Constellation Brands

1/30/2020 XYZ Beverage LLC

8/28/2019 Durham Distillery LLC

7/23/2019 Montanya Distillers LLC

5/2/2019 Nelson's Green Brier Distillery LLC

7/10/2018 Four Corners Brewing Co LLC

1/5/2018 Real McCoy Spirits, Corp.

1/5/2018 Copper and Kings American Brandy Co.

Vintage Wine Estates

9/23/2019 Owen Roe LLC

3/19/2019 Laetitia Vineyard And Winery, Inc.

3/5/2019 Alloy Wine Works LLC

11/5/2018 Qupe Wine Cellars LLC

1/14/2018 Tamarack Cellars

Dairy Farmers of America

2/17/2020 Assets of Dean Foods Company

6/24/2019 St. Albans Cooperative Creamery, Inc.

4/12/2019 Stremicks Heritage Foods LLC

12/17/2018 Saint Paul, Minnesota Facility of Agropur Inc.

Investment

Date

Target

Peak Rock Capital

3/19/2019 Turkey Hill Business of The Kroger Co.

10/24/2018 Pretzels, Inc.

10/9/2018 Louisiana Fish Fry Products LTD

8/9/2018 TNT Crust, Inc.

8/9/2018 Pizza Crust Business of Tyson Foods, Inc.

Kainos Capital

8/24/2019 Schuman Cheese, Inc.

12/22/2018 good2grow LLC

1/12/2018 Culinarte Marketing Group, LLC

Encore Consumer Capital

1/7/2020 The Lion Brewery, Inc.

11/14/2019 Murry's, Inc.

Entrepreneurial Equity Partners

2/12/2020 Kronos Foods Corp.

9/17/2019 Daniele International, Inc.

Grays Peak Capital

3/24/2020 First Start Holdings Inc.

9/11/2019 Freed Foods, Inc.


Mid-Atlantic Region

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

20.0x

22.0x

Alcoholic Beverages S&P 500

Non-Alcoholic Beverages Dairy & Protein

CPG Foods Produce, Ingredients, Co-Packer

Natural & Organic

11.0x

10.6x

11.9x

10.4x

10.0x

10.2x

11.2x

12.5x

12.6x

12.7x

10.5x

13.0x

AlcoholicBeverages

Non-AlcoholicBeverages

CPG Foods

Natural &Organic

Dairy &Proteins

Produce,Ingredients

& Co-Packers

-40.00%

-35.00%

-30.00%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

Alcoholic BeveragesDairy & ProteinNon-Alcoholic BeveragesProduce, Ingredients, Co-PackerCPG FoodsNatural & OrganicS&P 500

PUBLIC COMPARABLES

FOOD & BEVERAGE M&A

F&B Segments vs. S&P 500 EV/EBITDANTM EV/EBITDA

Food & Beverage Segments vs. S&P 500


LTM EV/EBITDA


Mid-Atlantic Region

PUBLIC COMPARABLES

Select Alcoholic Beverage Comparables by Market Capitalization

Select Non-Alcoholic Beverage Comparables by Market Capitalization


FOOD & BEVERAGE M&A

in millions of dollars

Recent Price Shares TTM TTM Enterprise Market EBITDA EV to EV to

Company Ticker 3/31/2020 Outstanding Revenue EBITDA Value Cap Margin Revenue EBITDA

Constellation Brands, Inc. STZ $143.36 192 $8,344 $3,041 $40,652 $27,481 36.45% 4.87x 13.37x

Brown-Forman Corporation BF.B 55.51 480 3,398 1,184 27,920 25,843 34.84% 8.22x 23.58x

Molson Coors Beverage Company TAP 39.01 217 10,579 2,328 17,500 8,454 22.01% 1.65x 7.52x

The Boston Beer Company, Inc. SAM 367.56 12 1,329 209 4,448 4,423 15.71% 3.35x 21.30x

MGP Ingredients, Inc. MGPI 26.89 17 363 59 503 459 16.21% 1.39x 8.55x

Craft Brew Alliance, Inc. BREW 14.90 19 193 (3) 350 291 -1.48% 1.81x -122.31x

Crimson Wine Group, Ltd. CWGL 5.85 24 67 (0) 135 136 -0.64% 2.02x -313.60x

Willamette Valley Vineyards, Inc. WVVI 4.85 5 25 5 48 24 21.70% 1.94x 8.94x

Eastside Distilling, Inc. EAST 1.16 9 16 (12) 20 11 -74.92% 1.30x -1.73x

Top 10 Median 2.64x 11.15x

Top 10 Average 3.57x 13.88x

Average Large Cap (Over $10B) 6.54x 18.47x

Average Mid Cap ($2B–$10B) 2.50x 14.41x

Average Small Cap (Under $2B) 1.66x 8.74x


*Excluded outliers from mean & median data




The Coca-Cola Company KO $44.25 4,319 $37,173 $12,120 $225,091 $189,983 32.60% 6.06x 18.57x

PepsiCo, Inc. PEP 120.10 1,403 68,158 12,542 194,820 166,848 18.40% 2.86x 15.53x

Keurig Dr Pepper Inc. KDP 24.27 1,420 11,229 3,437 49,298 34,148 30.61% 4.39x 14.34x

The Kraft Heinz Company KHC 24.74 1,224 24,977 6,562 57,918 30,226 26.27% 2.32x 8.83x

The Hain Celestial Group, Inc. HAIN 25.97 104 2,239 168 3,090 2,711 7.51% 1.38x 18.37x

TreeHouse Foods, Inc. THS 44.15 56 4,289 454 4,636 2,484 10.58% 1.08x 10.22x

National Beverage Corp. FIZZ 42.65 47 978 171 1,769 1,988 17.44% 1.81x 10.37x

Coca-Cola Consolidated, Inc. COKE 208.53 9 4,827 351 2,753 1,489 7.27% 0.57x 7.84x

Primo Water Corporation PRMW 9.01 135 2,395 308 2,669 1,410 12.85% 1.11x 8.68x

Farmer Bros. Co. FARM 6.96 17 580 14 202 120 2.37% 0.35x 14.69x







Mid-Atlantic Region




General Mills, Inc. GIS $52.77 611 $16,765 $3,643 $46,241 $31,986 21.73% 2.76x 12.69x

Herbalife Nutrition Ltd. HLF 29.16 142 4,877 679 5,186 4,015 13.92% 1.06x 7.64x

Darling Ingredients Inc. DAR 19.17 168 3,364 408 4,928 3,145 12.12% 1.46x 12.09x

The Hain Celestial Group, Inc. HAIN 25.97 104 2,239 168 3,090 2,711 7.51% 1.38x 18.37x

Sprouts Farmers Market, Inc. SFM 18.59 120 5,635 345 3,835 2,185 6.13% 0.68x 11.10x

United Natural Foods, Inc. UNFI 9.18 53 24,527 478 4,642 492 1.95% 0.19x 9.70x

Calavo Growers, Inc. CVGW 57.69 18 1,211 66 1,115 1,016 5.45% 0.92x 16.88x

SunOpta Inc. SOY 1.71 88 1,190 34 745 151 2.89% 0.63x 21.68x

Natural Grocers by Vitamin Cottage,

Inc.NGVC 8.51 23 912 46 601 191 5.06% 0.66x 13.03x






PUBLIC COMPARABLES

Select CPG Food Comparables by Market Capitalization

Select Natural & Organic Comparables by Market Capitalization


FOOD & BEVERAGE M&A






Mondelez International, Inc. MDLZ $50.08 1,454 $26,037 $5,122 $89,725 $71,762 19.67% 3.45x 17.52x

General Mills, Inc. GIS 52.77 611 16,765 3,643 46,241 31,986 21.73% 2.76x 12.69x


The Hershey Company HSY 132.50 211 8,007 1,937 31,652 27,659 24.19% 3.95x 16.34x

Lamb Weston Holdings, Inc. LW 57.10 147 3,949 854 10,733 8,342 21.62% 2.72x 12.57x

Post Holdings, Inc. POST 82.97 74 5,727 1,136 11,954 5,800 19.84% 2.09x 10.52x

Flowers Foods, Inc. FLO 20.52 212 4,124 402 5,615 4,342 9.76% 1.36x 13.95x

The Simply Good Foods Company SMPL 19.26 92 658 115 2,431 1,834 17.48% 3.70x 21.14x

Hostess Brands, Inc. TWNK 10.66 115 908 175 2,111 1,313 19.23% 2.33x 12.09x

B&G Foods, Inc. BGS 18.09 65 1,660 300 3,069 1,159 18.07% 1.85x 10.23x







Mid-Atlantic Region




Mondelez International, Inc. MDLZ $50.08 1,454 $26,037 $5,122 $89,725 $71,762 19.67% 3.45x 17.52x


General Mills, Inc. GIS 52.77 611 16,765 3,643 46,241 31,986 21.73% 2.76x 12.69x

Tyson Foods, Inc. TSN 57.87 366 43,027 4,110 33,021 21,125 9.55% 0.77x 8.03x

Hormel Foods Corporation HRL 46.64 545 9,521 1,293 24,726 25,082 13.58% 2.60x 19.12x

Post Holdings, Inc. POST 82.97 74 5,727 1,136 11,954 5,800 19.84% 2.09x 10.52x

Pilgrim's Pride Corporation PPC 18.12 250 11,409 976 6,870 4,516 8.56% 0.60x 7.04x

Beyond Meat, Inc. BYND 66.60 42 298 12 3,874 4,119 4.19% 13.00x 310.25x


Armanino Foods of Distinction, Inc. AMNF 2.46 32 42 9 74 79 20.59% 1.76x 8.55x






PUBLIC COMPARABLES

Select Dairy & Protein Comparables by Market Capitalization

Select Produce, Ingredients & Co-Packer Comparables by Market Capitalization


FOOD & BEVERAGE M&A






The Kraft Heinz Company KHC $24.74 1,224 $24,977 $6,562 $57,918 $30,226 26.27% 2.32x 8.83x

The Hershey Company HSY 132.50 211 8,007 1,937 31,652 27,659 24.19% 3.95x 16.34x

Archer-Daniels-Midland Company ADM 35.18 565 64,656 2,580 28,743 19,603 3.99% 0.44x 11.14x

McCormick & Company, Incorporated MKC 141.21 134 5,328 1,138 23,195 18,779 21.35% 4.35x 20.39x

Bunge Limited BG 41.03 141 41,140 1,486 12,060 5,820 3.61% 0.29x 8.12x

Lancaster Colony Corporation LANC 144.64 28 1,334 218 3,805 3,979 16.35% 2.85x 17.45x

Seaboard Corporation SEB 2,812.80 1 6,980 332 3,291 3,274 4.76% 0.47x 9.91x


John B. Sanfilippo & Son, Inc. JBSS 89.40 12 883 90 1,063 1,021 10.17% 1.20x 11.84x

Landec Corporation LNDC 8.69 29 587 11 456 253 1.92% 0.78x 40.41x






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FOOD & BEVERAGE M&A

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BKDCA, a wholly owned subsidiary of BKD, LLP, helps companies and

stockholders go beyond their numbers by creating value through investment

banking solutions that include mergers, acquisitions, sales, recapitalizations,

management buyouts and financings.

Founded in 1994, BKDCA is staffed with experienced investment bankers and

financial analysts. In addition, the firm draws on the resources of BKD with its

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The professionals of BKD Capital Advisors (BKDCA) have more than 200

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CONTACT US

Tony Schneider

Managing Director

Indianapolis, IN

317.383.4000

[email protected]


FOOD & BEVERAGE M&A

Michael McElreath

Asst. Vice President

Denver, CO

303.837.2283

[email protected]

mailto:[email protected]

mailto:[email protected]

food & beverage mergers & acquisitions update q1 2020 and beverage … · calavo growers,...

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