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Page 1: U.S. Bancorp Piper Jaffray Consumer M&A Weekly … · U.S. Bancorp Piper Jaffray Consumer M&A Weekly The Private Equity/ LBO Sponsor Corner Date Target Financial Sponsor Summary of

Consumer Mergers & Acquisitions David Jacquin - Managing Director, Group Head, 415-277-1505, [email protected] Scott LaRue - Managing Director, 650-838-1407, [email protected]

Tom Halverson - Principal, 612-303-6371, [email protected] John Twichell - Vice President 415-277-1533, [email protected] Barrymore - Vice President, 415-277-1501, [email protected] Robert Arnold - Associate, 415-277-1548, [email protected]

U.S. Bancorp Piper JaffrayConsumer M&A Weekly November 17, 2003

5.7x

11.0x 10.8x

15.6x15.0x

4.3x

6.6x 6.2x

9.4x8.8x

3.0x

5.0x

7.0x

9.0x

11.0x

13.0x

15.0x

17.0x

< $25 $25 - $100 $100 - $250 $250 - $1,000 >$1,000Transaction Size

EBIT EBITDA

Selected Consumer M&A Transactions(Approximate valuations, $ in millions)

Date Equity Enterprise LTM EV / LTMAnnounced Effective Target Acquiror Value Value EBITDA EBITDA Universe Comments

11/16/03 Pending Sylvan Inc (# > =) Snyder Associated Cos.(1) $63.2 $95.5 $13.5 7.1x Apparel Snyder Associated Cos to acquire distributor of mushroom spawn Sylvan11/12/03 Pending Bakery Chef Ralcorp (2) NA $287.5 $40.0 7.2x Food & Beverage Ralcorp to buy frozen bakery products company Bakery Chef11/12/03 Pending Enyce Holding LLC Liz Claiborne Inc NA $114.0 NA NA Apparel Liz Claiborne to buy urban sportswear brand from Sport Brands International11/10/03 Pending O-Cedar Holdings Inc. Freudenberg Household Product NA $5.4 NA NA Consumer Products German household products company to buy bankrupt mop maker O-Cedar11/10/03 Pending Tomark Inc Collegiate Pacific NA NA NA NA Consumer Products Collegiate Pacific to acquire manufacturer and distributor of sports equipment11/10/03 11/10/03 Cheddar's Brazos Private Equity Partners (3) NA NA NA NA Restaurant Dallas-based private equity firm Brazos to acquire casual dinning chain Cheddar's

(1) Based on offer price of $12.25 per share. Assumes fully diluted share count of 5.155 and net debt of $32.32 million (including minority interest) per most recent SEC filings (10-Q for period ending September 28, 2003).

(2) EBITDA of approximately $40.0 million - The Daily Deal.

(3) Cheddar's has annual revenues of more than $150 million. - Private Equity Central. Analysts estimated the deal value to be between $50-$100 million. - Dallas Business Journal.

M&A Spotlight Transactions

Recent High Yield Debt and Convertible Securities Issued by Consumer Companies

Announced Issued Company Issue Description Moody's / S&P Coupon Maturity Business Description

11/06/03 Not Priced Michael Foods $150.0 mm HY notes (144a) B3 / B- 8.00% 2013 Leading U.S. producer of egg products (frozen, pre-cooked, dried)10/30/03 Not Priced O'Charleys Inc (# > + =) $125.0 mm HY notes (144a) Ba3 / B 9.00% 2013 Operator of restaurants under the names O'Charley's, Stoney River Legendary Steaks, Ninety Nine 10/02/03 10/08/03 Scotts Company $200.0 mm HY notes (144a) Ba3 / B+ 6.63% 2013 World's leading supplier and marketer of consumer products for do-it-yourself lawn and garden care09/26/03 09/30/03 Rayovac Corp $350.0 mm HY notes (144a) B3 / B- 8.50% 2013 A leading battery and lighting device company09/22/03 09/29/03 Seminis Vegetable Seeds, Inc. $190.0 mm HY notes (144a) B3 / B- 10.25% 2013 Developer, producer and marketer of vegetable seeds

Source: Bloomberg, Public Press

November 12, 2003 - Ralcorp Holdings Announces Agreement to Purchase Bakery Chef, Inc.

Ralcorp Holdings, Inc. (NYSE: RAH) announced Wednesday that it signed a definitive agreement to purchase Bakery Chef, Inc., a leading manufacturer of frozen griddle products (pancakes, wafflesand French toast) and frozen pre-baked biscuits sold primarily in the food service channel. Bakery Chef also produces pre-baked frozen muffins, breads and rolls. Ralcorp has agreed to pay $287.5million in cash for the company. Bakery Chef had net sales of $165 million for the year ended December 31, 2002. Based upon Bakery Chef's 2002 results and Ralcorp's initial assessment of BakeryChef's intangible asset valuation and related amortization, Ralcorp anticipates the transaction will immediately add $.25 to $.35 to diluted earnings per share on an annual basis.

The transaction is expected to close within thirty days, subject to customary conditions including the Hart-Scott-Rodino waiting period. Ralcorp will finance the acquisition primarily throughborrowings under its existing $275 million revolving credit facility.

Bakery Chef will become a wholly owned subsidiary of Ralcorp and will operate as a platform for entry into the food service channel and frozen food segment. Bakery Chef's headquarters willremain in Westmont (a suburb of Chicago), Illinois. Bakery Chef operates five manufacturing facilities and employs approximately 800 people.

Bakery Chef is currently owned by an investment group led by Wind Point Partners, a private equity investment firm, with offices in Chicago, Illinois and Southfield, Michigan.

Joe Micheletto, Vice Chairman of Ralcorp Holdings, Inc., said, "We are excited about the addition of Bakery Chef and its superior management team. Bakery Chef will allow Ralcorp to exploregrowth into the food service channel and frozen food segment."

David L. Bere, President and Chief Executive Officer of Bakery Chef, said, "This acquisition enhances the Bakery Chef management team's plans to continue growing and improving the business.We will continue to focus on our solid foundation: delivering superior levels of customer service, developing high quality new products, and improving manufacturing operations."

Citigroup Global Markets Inc. served as exclusive financial adviser to Ralcorp in this transaction. Goldman, Sachs & Company acted as exclusive advisor to Bakery Chef and its owners.

Ralcorp produces a variety of store brand foods that are sold under the individual labels of various grocery, mass merchandise and drug store retailers. Ralcorp's diversified product mix includes:ready-to-eat and hot cereals, crackers and cookies, snack nuts, chocolate candy, salad dressings, mayonnaise, peanut butter, jams and jellies, syrups, and various sauces. In addition, Ralcorp holds a21.5 percent interest in Vail Resorts, Inc., the premier mountain resort operator in North America.

Source: Ralcorp Press Release.

All M&A Transaction Multiples(LTM Data as of 9 /3 0 /0 3 )

Page 2: U.S. Bancorp Piper Jaffray Consumer M&A Weekly … · U.S. Bancorp Piper Jaffray Consumer M&A Weekly The Private Equity/ LBO Sponsor Corner Date Target Financial Sponsor Summary of

U.S. Bancorp Piper JaffrayConsumer M&A Weekly

The Private Equity/ LBO Sponsor Corner

Date Target Financial Sponsor Summary of Transaction 11/10/03 Cheddar's Brazos Private Equity Partners Dallas-based private equity firm Brazos to acquire casual dinning restaurant chain Cheddar's11/03/03 Unilever units Hicks, Muse, Tate & Furst Hicks Muse to acquire Unilever Bestfoods U.K. Ltd.'s Ambrosia and Brown & Polson businesses10/30/03 United Agri Products Apollo Management Apollo Management to acquire United Agri Products from ConAgra10/30/03 CamelBak Products Inc Bear Stearns Merchant Banking Bear Stearns is close to acquiring water-carrying backpack maker CamelBak10/29/03 Piccadilly Cafeterias Inc HIG Capital & TruFoods Corp HIG Capital teams with TruFoods to acquire the restaurants of bankrupt Piccadilly10/29/03 Atkins Nutritionals Inc GS Capital & Parthenon Capital Goldman Sachs Capital Partners teams with Parthenon Capital to buy nutritional supplement 10/20/03 Eight O'Clock Coffee Gryphon Investors Inc San Francisco-based private equity firm Gryphon Investors buys Eight O'Clock coffee division from Great Atlantic & Pacific Tea Co.10/17/03 GNC Apollo Management LP Apollo Management to buy General Nutrition from Royal Numico NV 10/14/03 Aurora Foods Inc J.W. Childs & J.P. Morgan J.P. Morgan & J.W. Childs to jointly finance Pinnacle Foods merger with financially ailing Aurora Foods Inc. 10/13/03 Meguiar's The Shansby Group San Francisco-based private equity firm The Shansby Group buys Irvine-based liquid car wax producer Meguiar's10/13/03 Michael Foods Inc Thomas H. Lee Partners Thomas H. Lee Partners to acquire Minnetonka, Minnesota-based egg, potato and dairy products distributor Michael Foods Inc

Private Equity/LBO Analytics

Market OverviewClose as of Weekly YTD LTM11/14/03 % Change % Change % Change

NASDAQ 1,930 (2.1) 44.5 36.8DJIA 9,769 (0.4) 17.1 14.4S&P 500 1,050 (0.3) 19.4 16.2Russell 2000 533 (1.8) 39.1 38.0S&P Food Products Index 210 1.0 5.8 8.2S&P Retail Index 365 (1.4) 43.0 32.2S&P Apparel & Textiles Ind 196 (0.8) 36.6 36.0S&P Restaurant Index 231 (1.1) 41.6 38.2

SPREAD (LIBOR) FOR LEVERAGED BUYOUTS SENIOR BANK LOANSBy Deal Size

BUYOUT FUNDS RAISED

8090

100110120130140150160170

11/14/02 12/30/02 2/12/03 3/27/03 5/09/03 6/23/03 8/05/03 9/17/03 10/29/03

NASDAQ DJIA S&P 500

Equity Capital Markets Activity:

Last Week’s ActivityThere were 28 transactions completed in the equity capital markets last week raising a combined $4.8 billion. Deal activity consisted of 3 IPOs, 19 follow-onofferings, 1 ADR, and 5 convertible transactions. There were 3 IPOs that priced this week, including 2 from the tech sector. In the aftermarket IPOs tradedwell, finishing the week up 22% from offer. Follow-on activity consisted of 11 shelf takedowns and 8 conventional marketed offerings. On average, follow-onstraded down 5% in registration, but finished the week up 3% from offer price.

The Week AheadThere are 26 deals expected to price this week including 8 IPOs and 18 follow-ons. Issuers look to raise a combined $2.8 billion.

Broader Market ActivityThe major market indices were down for the week. The Dow Jones decreased 41 pts, or 0.4%, and closed at 9,769. The Nasdaq was down 41 points, or 2.1%,and closed at 1,930. The S&P 500 lost 3 points, or 0.3%, and closed at 1050. The Russell 2000 decreased 10 points, or 1.8%, finishing at 533.

Consumer Mergers & Acquisitions David Jacquin - Managing Director, Group Head, 415-277-1505, [email protected] Scott LaRue - Managing Director, 650-838-1407, [email protected]

Tom Halverson - Principal, 612-303-6371, [email protected] John Twichell - Vice President 415-277-1533, [email protected] Barrymore - Vice President, 415-277-1501, [email protected] Robert Arnold - Associate, 415-277-1548, [email protected]

$17.0$11.0$11.7

$34.5

$55.4

$34.5

$18.4$23.2

$6.0$5.3

$63.3

$36.9

$0

$10

$20

$30

$40

$50

$60

$70

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 3Q2003

($ in

Bill

ions

)

406

340257264277

363344

316306 353334

309

238251 242294

200250300350400450

1996 1997 1998 1999 2000 2001 2002 LTM9/30/03

Less than $100 Million $100 Million to $250 Million

November 17, 2003

Page 3: U.S. Bancorp Piper Jaffray Consumer M&A Weekly … · U.S. Bancorp Piper Jaffray Consumer M&A Weekly The Private Equity/ LBO Sponsor Corner Date Target Financial Sponsor Summary of

The following disclosures apply to stocks mentioned in this report if and as indicated: (#) U.S. Bancorp Piper Jaffray (USBPJ) was making a market in the Company’s securities at the time thisresearch report was published. USBPJ may buy and sell the Company’s securities on a principal basis. (^) A USBPJ analyst who follows this Company or a member of the analyst’s household has afinancial interest (a long equity position) in the Company’s securities. (@) Within the past 12 months, USBPJ was a managing underwriter of an offering of, or dealer manager of a tender offer for, theCompany’s securities or the securities of an affiliate. (>) USBPJ has either received compensation for investment banking services from the Company within the past 12 months or expects to receiveor intends to seek compensation within the next three months for investment banking services. (~) A USBPJ analyst who follows this Company, a member of the analyst’s household, a USBPJofficer, director, or other USBPJ employee is a director and/or officer of the Company. (+) USBPJ and its affiliates, in aggregate, beneficially own 1% or more of a class of common equity securities ofthe subject Company. (=) One or more affiliates of U.S. Bancorp, the ultimate parent company of USBPJ, provided commercial banking services (including, without limitation, loans) to the Companyat the time this research report was published. (*) A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective.These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or thesolicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under thesecurities laws of any such state. (**) These companies have conducted initial public offerings of their securities and are currently in the “Quiet Period.” As a result, there is no research available onthese companies. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities of these companies.

Nondeposit investment products are not insured by the FDIC, are not deposits or other obligations of or guaranteed by U.S. Bank National Association or its affiliates, and involve investment risks,including possible loss of the principal amount invested.

This material is based on data obtained from sources we deem to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This information is not intended to be used asthe primary basis of investment decisions. Because of individual client requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. It is not arepresentation by us or an offer or the solicitation of an offer to sell or buy any security. Further, a security described in this release may not be eligible for solicitation in the states in which the clientresides. Affiliates of U.S. Bancorp Piper Jaffray, including U.S. Bancorp and their respective officers or employees, or members of their families, may have a beneficial interest in the Company'ssecurities and may purchase or sell such positions in the open market or otherwise.

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© 2003 U.S. Bancorp Piper Jaffray, 800 Nicollet Mall, Suite 800, Minneapolis, Minnesota 55402-7020

Additional information is available upon request.

U.S. Bancorp Piper JaffrayConsumer M&A Weekly

Consumer Mergers & Acquisitions David Jacquin - Managing Director, Group Head, 415-277-1505, [email protected] Scott LaRue - Managing Director, 650-838-1407, [email protected]

Tom Halverson - Principal, 612-303-6371, [email protected] John Twichell - Vice President 415-277-1533, [email protected] Barrymore - Vice President, 415-277-1501, [email protected] Robert Arnold - Associate, 415-277-1548, [email protected]

November 17, 2003