The Global Food - Condere · Growth in food preservatives is mainly expected to come from emerging markets, particularly China. Anti-microbials Anti-microbials inhibit the growth

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Contents 1. KEY INSIGHTS .......................................................................................................................................................... 2

2. INTRODUCTION ....................................................................................................................................................... 3

Segments Overview ................................................................................................................................................ 4

Geographic Overview ............................................................................................................................................. 6

3. KEY TRENDS AND CHALLENGES .............................................................................................................................. 8

4. M&A OVERVIEW ..................................................................................................................................................... 9

Major Deal Drivers ................................................................................................................................................ 10

M&A Activity (2014-2017) .................................................................................................................................... 11

Select M&A Transactions - Strategic (2016-2018) ................................................................................................ 11

Top Strategic Buyers by Deal Count (2012-YTD2018) .......................................................................................... 14

Top Strategic Buyers by Deal Value (2012-YTD2018) ........................................................................................... 14

Select Transactions by Financial Sponsors (2012-YTD2018) ................................................................................ 15

5. PEER TRADING ANALYSIS ...................................................................................................................................... 17

6. GLOBAL M&A PARTNERS – FOOD & BEVERAGE TEAM ......................................................................................... 22

ABOUT Global M&A Partners ............................................................................................................................... 23

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1. KEY INSIGHTS

The Food Ingredients industry is an essential component in the Food & Beverage supply chain. Positioned amid raw materials and final products, ingredients provide a wide range of applications, including further product development and improving consumer health across the Food & Beverage landscape. Food Ingredients improve product taste, texture and appearance while enhancing shelf life and nutritional value.

This $76bn industry is characterized by high barriers to entry, significant organic growth and strong margins. Historical growth has primarily been fueled by increasing demand from both consumers and food producers for products derived from specialty ingredients, which offer functional and nutritional benefits. Over the last decade, growth of the global ingredients industry has largely outperformed the broader Food & Beverage sector. We firmly believe these characteristics and trends in the Food Ingredients industry will continue.

• Food & Beverage Long-Term Outlook: Ingredients are an integral part of the Food & Beverage industry, and therefore, trends in the global Agricultural and Food & Beverage sectors are of major significance to industry performance. Favorable macro trends, including increased adoption of healthy convenient food, changing consumer lifestyles, a growing global middle class, rising disposable income in developing countries, evolving food habits, changing consumption patterns, rising demand for beverage meal replacements and ready to eat foods, are all sparking demand for growth and innovation in the Food Ingredients industry.

• Favorable Sector-Specific Trends: While ingredient sales span the globe, companies have begun to optimize supply chains and establish regional production, R&D and sales departments. This allows Food Ingredients companies to capitalize on local market knowledge and spur innovation. This is a key component to their success in new product development, improved applications of existing products, and continuing food ingredient modernization and specialization.

A significant challenge faced by Food Ingredients companies is to address the higher demand for and increased specialization of food products to include changing tastes and preferences. The most successful companies have to remain proactive and take the necessary measures to address evolving consumer habits, including:

• Adapting product portfolios to satisfy these new consumer trends and local regulations, resulting in a shift towards offering more value-added ingredients (versus traditional basic synthetic ingredients);

• Increasing production capacity and local presence to meet client demands;

• Attracting a skilled workforce, retaining existing talent and automating production lines;

• Anticipating consumer needs concerning food properties, safety, traceability and sustainability.

While recent merger and acquisition (M&A) activity is robust, there remains a tremendous opportunity for further consolidation. The Ingredients industry is “barbell” in nature with large diversified food producers on one end of the spectrum and many small, specialized players with unique product offerings on the other. These smaller companies often lack the financial resources and economies of scale necessary to compete with the larger corporate players. Moreover, valuations are currently at peak levels due to the abundance of liquidity available from financial buyers and the strong appetite of strategic buyers targeting specialty, niche, growing sectors. We expect this “seller’s market” to continue in the near- to intermediate-term and for M&A activity to remain very strong.

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2. INTRODUCTION Food Ingredients represents a multibillion dollar global industry that is growing rapidly. Food ingredients are the base composites of food products and are designed to add particular benefits to the final products. They have a wide range of applications in various industries for product development and improving consumer health. Ingredients improve product taste, texture and appearance while enhancing shelf life and nutritional value. These ingredients are added in small quantities and are less sensitive to pricing pressure, as they typically are a fraction of the overall end-product cost (ranging from 0.5%+ for flavours to 5%-10% for some enzymes) compared to the significant added benefits. Innovation in the Food & Beverage industry, particularly in the processed foods domain, has generated numerous opportunities for new product development in the Food Ingredients market. Food preferences have changed, and consumers, particularly those in the growing middle class, demand variety in food. This demand, along with the need for healthier, convenient and premium foods, has boosted innovation in the sector, which is further required by increasing competition and the need for raw material cost reduction. Global demand for Food & Beverage ingredients amounted to 30mn tonnes in 2016. However, using volume to assess the overall importance of ingredients can be misleading, as many products, such as enzymes and high-intensity sweeteners, need only be used in very small quantities in order to make a significant impact on the finished product, while others require much larger volumes.

The Food Ingredients market is highly competitive and fragmented with a large number of players at local and regional levels. The global market is estimated to be $75.9bn in 2017 and is forecasted to grow at a CAGR of 5.5% to reach $116.5bn in 2025.

GLOBAL FOOD INGREDIENTS MARKET SIZE

Strong Organic Growth is Expected to Continue

$75.9

$116.5

$0

$30

$60

$90

$120

$150

2017E 2025E

(In U

SD b

n)

Source: Research and Markets

The Global Food Ingredients market is expected to reach $91bn in 2020 driven by Specialty Food Ingredients segments.

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79%

21%

2013

59%

41%

2016

GLOBAL FOOD INGREDIENTS MARKET Segments Overview The market is segmented into Sensory and Functional Food Ingredients. By Product Type

Source: Grand View Research and Future Market Insights

GLOBAL FOOD INGREDIENTS MARKET Functional Ingredients The Functional Food Ingredients segment has been gaining momentum driven by increasing demand for healthy foods with high nutritional value. Vitamins were the largest functional constituents within the segment in 2016. The use of probiotics and botanical/bioactive ingredients has increased at a swift pace.

Antioxidants Antioxidants are preservatives which inhibit oxidation of food and cosmetic products. Global volume growth for antioxidants is estimated at 3.6% p.a. (from 2016-21). Growth in food preservatives is mainly expected to come from emerging markets, particularly China.

Anti-microbials Anti-microbials inhibit the growth of microbes by either reducing water availability or increasing acidity. According to IHS Markit estimates, global volume growth for antimicrobials is estimated at 2.9% p.a. (from 2016-21). China is expected to lead the growth trend with an estimated CAGR of 4-5% from 2016-21.

Vitamins Probiotics Proteins Vitamins play an Probiotics are cultures The market for essential role in of live microbes protein ingredients is metabolic activities, (bacteria) which when being driven by converting fat into ingested in adequate growing consumer energy and forming amounts, deliver preference for healthy tissues and bones. health benefits. The food, rising concerns Vitamins occur total end-market for about animal health naturally and can also probiotics sold to and nutrition and be synthesized consumers is growing demand for artificially. The estimated at $37.0bn personal and health estimated market of in 2016 and is care products. The vitamins is valued at expected to grow at protein ingredients $4.5bn in 2016 9% p.a. mid-term. market is projected to with projected mid- reach $58.5bn by 2022, term growth of 2- growing at a CAGR of 4% from 2016-21. 6% from 2017.

Functional Sensory

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GLOBAL FOOD INGREDIENTS MARKET Sensory Ingredients The Sensory Ingredients segment is also gaining traction, in line with global Food & Beverage market demand and continued industry innovation. Sensory properties are key elements for consumers in order to attract repeat purchases, thus leading to market success for the finished products.

Flavours & Fragrances Sweeteners Food Colours Flavours and fragrances are compounds that affect both taste and smell. The total Flavours & Fragrances (F&F) market is estimated to be $20.0bn in 2016 and is expected to grow at a CAGR of 2-3% through 2020. F&F demand is driven by macro trends such as population growth and rising disposable income resulting in higher demand for consumer goods thereby making the category less prone to cyclicality.

Sweeteners can be used to add sweetness and impart other functionalities such as bulk and texture and to mask bitterness, control crystallization, control viscosity, and prevent spoilage. The market for sweeteners (excluding commodity sweeteners) is estimated at $3.8bn in 2016.

Food colours are used to offset colour loss, correct natural colour variations, enhance colours that occur naturally, and provide colour to colourless foods. The Food Colours market is estimated to be $1.8bn in 2016 with expected mid-term growth of 4-5% p.a. Natural colours, which accounts for 55% of the market, is expected to grow at 6-8% p.a.

Enzymes Cultures Texturants Enzymes are primarily used as processing aids (i.e., carry out bioconversions, speed-up reactions, etc.) and are not present in the finished product. According to Wall Street estimates, the global enzymes market is estimated at $4.0bn growing at 5-6% p.a. since 2000. Food & Beverage and Household Care applications together account for over 75% of the market.

Food cultures are live bacteria used in the production of fermented foodstuffs. The Global Cultures market is estimated at $1.2bn in 2016. According to Wall Street estimates, the market is expected to continue growing at 5-6% p.a.

Texturants are ingredients used to control and modify the texture of food & beverage products. They are primarily classified into emulsifiers and hydrocolloids. Developed markets are major consumers of texturants. In 2016, Western Europe accounted for 28% of consumption by value, followed by North America at 25%.

MARKET SIZE FOR SELECTED SENSORY INGREDIENTS

Organic Sales Growth and EBIT Margin (2016)

Area of the circles represents relative market size Source: Wall Street Research

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GLOBAL FOOD INGREDIENTS MARKET

Geographic Overview North America North America has the largest market share (33%) for Food Ingredients, driven by “go-green” and organic trends. In this region, nearly 75% of consumers choose clean label products because they are considered to be safer to consume and are processed in a controlled environment. Despite the higher cost, consumer preference for such products is predicted to remain high. North America is expected to dominate the global market due largely to the increasing consumption of processed foods in the United States and Canada. Europe

The European Food Ingredients market is estimated at $13.9bn in 2016 and is projected to reach $17.8bn by 2021, growing at a CAGR of 5.1%. Market growth is being driven by a consumer shift towards low-fat, balanced diets. Constraints to growth are high raw material and processing equipment costs, as well as stringent regulations imposed by food administration bodies. BRIC

BRIC countries are expected to witness the highest growth driven by economic expansion and are viewed as emerging markets for Food Ingredients. However, they currently face supply chain and sustainability issues due to lack of infrastructure and cold storage facilities which have reduced the level of imports and exports of processed foods.

Geographical Breakdown of Food Ingredients

8.0% 3.0%

33.0%

North America

Europe

25.0% Asia Pacific

South America

Source: Mordor Intelligence

31.0% Africa

In North America, 75% of consumers purchase clean label products because they are considered safer to consume and are processed in a controlled environment.

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GLOBAL FOOD INGREDIENTS MARKET

Application by End Market Ingredients have many uses, ranging from improving the nutritional profile to changing the flavour of foods. Manufacturers of consumer staples now purchase ingredients instead of producing them in-house as the production of commodity-driven ingredients is capital intensive and generates low returns.

Soft Drinks comprises the largest end market for ingredients, followed by Bakery & Confectionaries, which both require high volumes of specialty ingredients such as hydrocolloids, emulsifiers, flavours, and cultures. Meat Products and Functional Food/Beverages/Dietary Supplements are expected to see higher growth in the coming years due to increasing demand for nutritional value in food. The growing brewery industry and the occurrence of highly complex procedures have increased the demand for enzymes and starter cultures. Demand for Functional Food Ingredients has increased due to growing health concerns and consumer awareness, which have driven the market for prebiotics, probiotics, minerals, and proteins.

GLOBAL APPLICATION OF FOOD INGREDIENTS

By End Use

Source: Euromonitor International

Soft Drinks and Bakery & Confectionaries are the largest end markets in the Food Ingredients industry, requiring high volumes of specialty Food Ingredients such as hydrocolloids, emulsifiers, flavours, and cultures.

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3. KEY TRENDS AND CHALLENGES

Source: Various press releases

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Towards 2018, food companies will focus on sustainable ingredients to meet consumer demand and innovative use of technology will play a greater role in helping to protect the environment. New approaches will be required, including strategic partnerships involving some unexpected allies. Greater collaboration across private companies, local/national governments and Non- Governmental Organisations is also expected. Cargill is seeking products made with sustainable ingredients and using science to address sustainability challenges in agriculture and food production and to increase traceability.

-Cargill Communications Director

4. M&A OVERVIEW

The global Food Ingredients market is highly fragmented and comprised of large and diversified Food & Beverage groups such as Cargill and Archer Daniels Midland Company (ADM); large ingredients producers such as Koninklijke DSM, Givaudan, Kerry, Ingredion, and Sensient; and small- and mid-sized companies with niche product portfolios. There are many small, innovative companies offering unique product lines including faster formulation products and customized blends (e.g., JMH International, Redbrook Ingredients, Campus, and others).

The shift from commodity to valued-added ingredients is expected to drive M&A volume with innovative, niche players identified as prime acquisition targets. Developed countries will see transaction activity rise, with technology, skilled labor, regulation, and strict patent protection acting as key drivers of deal volume. Emerging markets are also expected to show some incremental growth in M&A activity due to the rising number of health-conscious consumers.

Cash-rich companies with sustainable operating cash flows, notably Givaudan, Symrise, and Frutarom, have exhibited an increasing appetite for external growth. Frutarom, currently in a pending agreement to be acquired by International Flavors and Fragrances (IFF) for $7.1bn, has completed 21 investments in various geographies and segments within the Food Ingredients market since 2012.

In terms of post-merger integration, large corporations are looking for new ways to integrate small companies into their own organisations. We have observed a change from the old M&A integration model (i.e., consolidation, integration and delivery of immediate synergies) to an integration model based on more autonomy of the target into the group.

Food Ingredients transaction multiples have increased sharply, driven by strong strategic buyer demand, substantial availability of private equity capital, and low interest rates.

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M&A OVERVIEW

Major Deal Drivers

Accessing New Markets: Long-term success in the Food Ingredients market is contingent upon having a global presence. For this reason, companies often seek geographic expansion to not only increase their customer base, but also broaden the scope of product innovation to address different consumer preferences across markets.

In 2018, Firmenich expanded its presence in South Africa with the acquisition of Flavourome, an established flavours company in the region. Roha, one of the leading global manufacturers and marketers in the food colour segment, acquired Italy-based Essential SRL in 2017.

Shift Towards Higher Value-Added Products: Commodity-driven ingredients companies are looking to expand into the specialty ingredients segment to increase returns and reduce volatility. This move is illustrated by ADM with the $3.1bn acquisition of Wild Flavours and DowDuPont’s $1.2bn acquisition of FMC Corporation’s Health & Nutrition business in 2017.

Natural, organic and plant-based ingredients companies are targets, underscored by Givaudan’s acquisition of Naturex (pending) and Sensient’s acquisition of the Natural Colour Business from GlobeNatural, both in 2018.

Access to New Technology: As innovation in the ingredients industry is a key driver of growth, small companies with proven track records in innovation are targeted by large corporations, such as Lesaffre taking a majority stake in U.S. bioscience company Enverra.

“Our acquisition of Ganeden strengthens our position in the nutritional actives market and enables us to use additional technologies to build our immune health and gut health market platforms,” said Frank Hayes, director of corporate affairs for Kerry Group, referring the acquisition in October 2017.

Consolidation: The Food Ingredients sector remains highly fragmented and is consolidating as companies accelerate acquisition growth strategies to increase market share and position, leverage cross-selling opportunities and expand capacity. Following the DowDuPont merger, the group announced that it will invest $10bn in its food solutions business. Frutarom has implemented an aggressive external growth strategy doubling in size every four years. “During the past five years, our many acquisitions have given us around 10,000 new customers who are now buying many solutions that we could not offer them in the past,” said Ori Yehudai, CEO of Frutarom.

Larger Companies’ Appetite for Start-Ups: Start-ups are now widely recognized as invaluable sources of innovation, fueling growth and providing pioneering business solutions. Food & Beverage industry partnerships between start-ups and large firms will continue to grow as highlighted recently by Unilever and Cargill.

Examples in the Food Ingredients industry include the collaboration of Naturex and Neovia to study and develop new natural and innovative animal nutrition and health solutions and the acquisition of PowderPure by IFF to further expand offerings for clean label solutions.

Increased Private Equity and Venture Capital Investment: Private equity and venture capital funds have been active investors in middle-market Food Ingredients companies, with the sector’s organic growth, high margins, and consolidation opportunities being key draws. Since 2012, more than 34 financial investments were disclosed in the Food Ingredients sector. Private equity groups are very supportive of strategies to accelerate external growth and international development. Solina, a French company specializing in taste and visual solutions for the meat industry, has completed more than eight acquisitions in Europe since its first buyout in 2012 backed by IK Investment and then Ardian in 2015.

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M&A OVERVIEW

M&A Activity (2014-2017) The Food Ingredients industry has seen significant consolidation, averaging more than 40 transactions per year between 2000 and 2007. Transaction activity slowed following the global financial crisis as the industry shifted focus to organic growth and R&D investment, during which time a growing number of small players entered the market. In 2016, M&A activity began to reaccelerate as small, innovative players sought strategic partners with greater access to capital, brand recognition, and geographic reach. Larger Food & Beverage companies have shown an increasing preference for suppliers with international production and supply chains, which has been a catalyst for increased consolidation.

Source: Mergermarket

M&A OVERVIEW

Select M&A Transactions - Strategic (2016-2018) EBITDA multiples increased from an 8.0x-10.0x average range in 2012-2014 to greater than 17.0x in 2016-2018 for both strategic and financial transactions. The expansion in EBITDA multiples is due to the high level of liquidity in the market and an increased buyer appetite for this asset class. For example, Iberchem (flavour brand Scentium) was acquired by Magnum in 2013 at an EBITDA multiple of approximately 8.0x and later sold to Eurazeo in 2017 for 16.0x. In 2018, Givaudan announced a $1.8bn bid for Naturex, representing an EBITDA multiple of 24.3x.

EV/ Revenue EBITDA

Median 1.6x 19.7x Mean 2.1x 17.3x

Date Target Target Country Target Description Acquirer Acquirer

Country

7-May-18 Frutarom Industries, Ltd. Israel Engaged in developing, manufacturing and marketing flavours &

ingredients

International Flavors & Fragrances Inc

US

26-Mar-18 Naturex France Engaged in plant extraction and the development of natural ingredients and solutions for the food, health and beauty sectors Givaudan Switzerland

14-Mar-18 Meroar S.A. (70% Stake) Argentina Argentina-based company that researches, develops, manufactures and

markets flavours and fragrances Frutarom Industries, Ltd. Israel

2-Mar-18 Sichuan Weizhinong Food Co., Ltd.; Sichuan Hengxing Food Co., Ltd.

China;China China-based company engaged in manufacture & sales of food condiment; China-based company engaged in manufacture and sales of food condiment

Chongqing Fuling Zhacai Group Co., Ltd.

China

8-Feb-18 GlobeNatural Peru Peru-based natural food and ingredient company Sensient Technologies Corporation

US

1-Feb-18 Acatris Holding BV Netherlands Netherlands-based company providing stabilizers to health and food ingredients company Caldic B.V. Netherlands

30-Jan-18 California Natural Products Inc. US Manufacturer of specialty rice and soy-based ingredients for blue-chip

consumer food brands Gehl Foods, LLC US


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M&A OVERVIEW

Select Transactions – Strategic (2016-2018) (Continued)


Country

10-Jan-18 Estrategia en Alimentos SA Mexico Mexico-based company that produces ready-to-use food ingredients and

preparations for the milling, baking and pastry industry Eurogerm SA France

21-Dec-17 Natural Flavors Inc. US US-based company engaged in producing organic flavours for food and beverage industry Firmenich SA Switzerland

20-Dec-17 Essential Italy Plant and Fruit based natural colouring and flavouring ingredient Roha Dyechem India

20-Dec-17 Bremil Industria De Produtos Alimenticios Ltda.

Brazil Brazil-based manufacturer and supplier of food additives and flavourings solutions

Frutarom Industries, Ltd. Israel

17-Nov-17 Amyris Brasil Ltd Brazil Develops renewable compound for variety of markets Royal DSM Netherlands

15-Nov-17 National Company for Maize Products (97.67% Stake)

Egypt Egypt based company manufacturing fructose and glucose syrups, starches and modified starches for pharmaceutical, food, textile and paper industry

Cairo Three A Group Egypt

6-Nov-17 NutraGenesis LLC US US-based provider of nutraceutical and functional ingredients for the dietary supplement

Innophos Holdings, Inc. US

1-Nov-17 FMC Corp (Health and Nutrition Business) US Diversified chemical company that provides solutions, applications, and

products for the agricultural, consumer, and industrial markets worldwide. DowDuPont US

25-Oct-17 Arne B. Corneliussen AS Norway Norway-based company engaged in manufacture and supply of spices, marinades, flavourings, starter cultures and other functional ingredients, and providing packaging solutions

Orkla Food Ingredients AS Norway

18-Oct-17 Mighty International Co.,Ltd. Thailand Thailand-based manufacturer of food ingredients, headquatered in

Bangkok. Frutarom Industries, Ltd. Israel

11-Oct-17 Ganeden, Inc. US US-based manufacturer and supplier of probiotics and probiotic bacteria. Kerry Group Ireland

6-Oct-17 Colarome inc. Canada Canada-based provider of dyes, pigments, flavours and extracts for the natural ingredient sector Capol GmbH Germany

2-Oct-17 Mae Terra Produtos Naturais e Organicos Brazil Brazil-based producers of organic food ingredients Unilever Plc

United Kingdom, Netherlands

8-Sep-17 Grama Aliment S.L. Spain Spain-based company engaged in formulation, mixing and commercialization of preparations, ingredients, spices and additives for the food industry

Solina Group SAS France

6-Sep-17 Geovita Functional Ingredients, S.r.l (52% Stake)

Italy Italy-based company engaged in the production and sale of legumes, rice, fast-cooking grains and other healthy ingredients Ebro Foods SA Spain

22-Aug-17 Muehlehof Gewuerze AG Switzerland Switzerland-based flavour and food ingredient producer Frutarom

Industries, Ltd. Israel

15-Aug-17 Flavours and Essences (UK) Limited

United Kingdom UK-based producer of flavours and natural colours Frutarom


1-Aug-17 Novel Ingredient Services, LLC US US-based provider of dietary supplement ingredient solutions Innophos

Holdings, Inc. US

25-Jul-17 Chemcolour Industries Ltd

New Zealand

New Zealand-based company engaged in importing, manufacturing and marketing of specialty chemicals and food ingredients Azelis S.A. Belgium

11-Jul-17 Vika B.V. Netherlands Specializes in dairy ingredients, fonds, stocks, vegetable extracts among which kiwi extracts and other specialty ingredients Givaudan SA Switzerland

3-Jul-17 Flavour Ingredient Holdings, LLC US US-based company engaged in the production and sales of food flavourings T.Hasegawa Co,

Ltd. Japan

27-Jun-17 Illinois Corn Processing, LLC US US-based producer of ingredients and distillery products Pacific Ethanol

Inc. US

6-Jun-17 Chamtor SA France France-based producer of wheat-based glucose, starch and proteins Archer Daniels Midland Company US

5-May-17 Eis Gräbner Germany Manufacturer of ice-cream ingredient Orkla Norway

10-Apr-17 Columbia Phytotechnology US Engaged in manufacturing of fruit and vegetable powder

International Flavours & Fragrances

US

4-Apr-17 Rene Laurent SAS France France-based company engaged in the development, production and marketing of flavours and natural extracts


3-Apr-17 Orchard Valley Foods Limited (85% Stake)

United Kingdom

Produces, markets, and distributes confections, edible decorations, and powder food ingredients to UK bakery, chocolate and ice cream market

Orkla Food Ingredients AS Norway

27-Mar-17 Supremia Grup S.R.L. Romania Romania based producer and supplier of food ingredients Solina Group SAS France

1-Mar-17 Rathi Food Industries Private Limited India India-based manufacturer of spices; India-based manufacturer of spices Empire Spices &

Foods Limited India

21-Feb-17 Tianning Flavour & Fragrance China China-based company engaged in the manufacturing and exporting of

fragrances, food additive and other chemical products Kerry Group Plc Ireland (Republic)


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M&A OVERVIEW

Select Transactions – Strategic (2016-2018) (Continued)


Country

21-Feb-17 Taste Master Pty. Ltd. Australia Australia-based company produces beverage, sweet & savoury flavours for snack and meat & culinary industries Kerry Group Plc Ireland

(Republic)

15-Feb-17 Ojah Netherlands Engaged in production of meat substitutes Korys Belgium

9-Feb-17 Unique Flavors South Africa South Africa-based company which develops and supplies natural and artificial flavours within Africa


3-Jan-17 Palsgaard Candon S.A. Brazil Brazil-based supplier of special ingredients and premixes as well as bakery emulsifiers to the food industry Palsgaard A/S Denmark

1-Dec-16 Main Process Argentina Producer of food preparation ARGANA Austria

29-Nov-16 Enrico Giotti S.p.a. Italy Italy-based manufacturer of natural flavours, aromatic herbal extracts, and concentrated juices

McCormick & Company Inc. US

24-Nov-16 Sosa Ingredients SL (40% Stake) Spain Spain-based manufacturer of premium ingredients for gastronomy and

pastry Savencia Fromage & Dairy France

10-Nov-16 Proveedores De Ingenieria Alimentaria Mexico Mexico-based producer of food ingredients and flavours Frutarom


13-Sep-16 David Michael & Co US US-based flavours company International Flavors & Fragrances Inc

US

15-Aug-16 InterHealth Nutraceuticals US Development of nutritional ingredient Lonza Group Switzerland

3-Aug-16 Redbrook Ingredient Services Limited

Ireland (Republic)

Engaged in developing, producing and marketing of innovative specialty savory taste solutions includes seasoning and functional blends, marinades, glazes, cures and specialty ingredients for food processors


20-Jul-16 Mallet & Company, Inc. US US-based manufactures and sells ingredients and equipment to wholesale baking and food processing industries worldwide

Vantage Specialty Chemicals, Inc. US

23-May-16 Spicetec Flavors & Seasonings US US-based company engaged in offering flavours, spices and savory

seasoning solutions Givaudan SA Switzerland

3-May-16 Extrakt Chemie Dr. Bruno Stellmach GmbH &Co. KG

Germany Germany-based producer of specialty ingredient extracts, primarily for pharma, natural medications, nutritional supplements, foods and cosmetics


29-Apr-16 Whanee Corporation South Korea South Korea-based provider of food and beverage ingredients with a focus on dairy, functional and flavour related products Brenntag AG Germany,US

23-Feb-16 American Fruits & Flavor US

Engaged in development, production and marketing of fruit flavours, flavour systems, juices, concentrates, natural sweeteners and fruit-based products

Monster Beverage Corporation US

10-Feb-16 Norbert Schaller Gesellschaft m.b.H. (flavours business)

Austria Austria-based flavours business of Norbert Schaller Gesellschaft m.b.H. MANE Austria GmbH Austria

2-Feb-16 Harvest Innovations (90% Stake) US US-based producer of minimally processed, expeller-pressed soy proteins,

oils and gluten-free ingredients Archer Daniels Midland Company US

20-Jan-16 Centre Ingredient Technology, Inc. US

US-based company engaged in development, manufacturing of natural flavours and fragrance ingredients for the food, beverage, and cosmetics industries

Takasago International Corporation

Japan

12-Jan-16 Grow Company, Inc. US US-based manufacturer of unique food flavours, natural food colouring agents, cosmetic ingredients, and dietary supplements for human and animal consumption



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Top Strategic Buyers by Deal Count (2012-YTD2018) A total of 146 deals (109 strategic buyer and 37 financial buyer transactions) were executed since 2012, with Frutarom Industries (21 acquisitions since 2012), ADM and Kerry Group (5 each), and Solina (4) among the major industry consolidators during the same period.

21

5 5 4 3 3 3

0

5

10

15

20

25

FrutaromIndustries, Ltd.

Archer DanielsMidland

Company

Kerry Group Plc Solina GroupSAS

Givaudan SA InnophosHoldings, Inc.

Naturex SA

(No.

of d

eals

)


Top Strategic Buyers by Deal Value (2012-YTD2018) Marquee strategic transactions include the $3.1bn acquisition of Wild Flavours by Archer Daniels Midland Company and Symrise’s $1.8bn acquisition of Diana Corp (EBITDA multiple 14.0x), both in 2014.

M&A OVERVIEW

Top Strategic Buyers by Deal Value (2012-YTD2018)

$7,114

$3,383

$1,806

$689 $536 $461 $340 $340 $320 $282$0

$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000

InternationalFlavors &

Fragrances Inc

ArcherDanielsMidland

Company

Symrise AG MonsterBeverage

Corporation

FrutaromIndustries,

Ltd.

Eurazeo SA Givaudan SA IngredionIncorporated

MitsubishiCorporation

Naturex SA

(in

USD

mn)


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M&A OVERVIEW

Select Transactions by Financial Sponsors (2012-YTD2018) Private equity and venture capital investors are attracted to the growth and margin profiles of Food Ingredients companies, and with the high level of industry fragmentation, see significant opportunity to fund organic growth and buy-and-build strategies. This trend is further indicated by robust transaction volume, strong valuation multiples, and substantial growth of smaller companies. This is portrayed by Riverside Company’s recent investment in Parker Products, a value-added developer of specialty ingredients.

EV/ Revenue EBITDA

Median 1.5x 12.6x Mean 2.1x 12.1x

Date Target Target

Country Target Description Acquirer Acquirer Country

16-Jan-18 Chicago Custom Foods LLC US US-based manufacturer and marketer of popcorn seasoning Highlander Partners, L.P. US

2-Oct-17 Parker Products Inc US US-based developer and manufacturer of custom specialty ingredients for food & beverage companies

The Riverside Company US

14-Nov-17 Lyons Magnus Inc. US US-based developer and manufacturer of fruit and flavour solutions for the restaurant chains, foodservice, healthcare and dairy industries

Paine Schwartz Partners, LLC US

28-Sep-17 Seidler Chemical Co, Inc US US-based supplier, distributor, blender and re-packager of specialty chemicals and ingredients

Maroon Group, LLC US

3-Jul-17 Iberchem S.A. Spain Spain-based manufacturer and distributor of flavours and fragrances for household, personal care, perfumery and food sectors Eurazeo SA France

31-May-17 Minafin Group Belgium, France, Luxembourg

Chemical company that develops and manufactures active ingredients, organic intermediates and fine chemicals

Groupe Siparex; Croissance Nord-Pas-de-Calais

France

4-Apr-17 Agridient B.V. Netherlands Engaged in sourcing and marketing ingredients produced by strategic partners in crop-processing industries as well as ingredients used in industries such as food, pharmaceutical and pet food

Nimbus BV Germany, Netherlands

31-Mar-17 Koninklijke Euroma BV Netherlands Netherlands-based company that manufactures and produces spices, herb mixes, functional blends and liquids and paste

Parcom Capital Management

Netherlands; Netherlands

2-Feb-17 Niacet Corporation US US-based producer of specialty ingredients for food, feed, and pharmaceutical applications such as propionates and acetates

SK Capital Partners US

2-Jan-17 OmniActive Health Technologies Limited India

India-based manufacturer and distributor of nutritional and active natural ingredients to the healthcare, food and personal care industries

Everstone Capital Management India

13-Nov-16 Optima SRL Italy Italy-based company engaged in the production of ice cream ingredients

Charterhouse Capital Partners

United Kingdom

10-Oct-16 Galam Ltd Israel Israel-based company engaged in manufacturing and marketing of glucose, fructose, and starch to food and beverage industry

First Israel Mezzanine Investors Ltd

Israel

7-Oct-16 Florida Food Products Inc US US-based agribusiness that manufactures clean-label, vegetable-based curing agents, preservatives, and ingredients for the food, cosmetic, pharmaceutical, nutraceutical and agricultural industries

Kainos Capital LP US

5-Oct-16 Vegetarian Express Ltd. United Kingdom UK-based supplier of plant-based food ingredients

Bridges Sustainable Growth Fund III

United Kingdom

6-Sep-16 Fytexia SAS France France-based company that develops and distributes clinically effective natural ingredients used in food supplements throughout the world ArchiMed SAS France

3-Aug-16 Sosa Ingredients SL (78.7% Stake) Spain Spain-based manufacturer of premium ingredients for gastronomy and

pastry Meridia Capital Spain

28-Jul-16 Ecom Food Industries Corporation Canada Canada-based producer of extracts, flavours, antioxidants, specialty

oleoresins and flavour enhancers Granite IV Partners LP Canada

4-Jul-16 Phoon Huat & Company (Pte) Ltd Singapore Singapore-based company engaged in manufacturing and Supplying of

bakery, beverage, and confectionery ingredients.

Standard Chartered Private Equity Limited

Singapore

17-Mar-16 Ramón Sabater, S.A.U. China, Spain,US

Spain-based company engaged in producing and distributing spices and ingredients for the food industry

Portobello Capital Gestion, SGECR Spain

17-Mar-16 YesSinergy do Brasil Agroindustrial Ltda. Brazil Engaged in the production of nutritional feed additives, such as

mycotoxin binders, prebiotics and organic-mineral complexes Aqua Capital Brazil


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M&A OVERVIEW

Select Transactions by Financial Sponsors (2012-YTD2018) (Continued)


Country

1-Feb-16 Solina Group SAS France France-based manufacturer of ingredients for the food industry Ardian France

12-Dec-15 Euro Gamma SPA Italy Italy-based producer of food colouring Corpfin Capital SA Spain

28-Jul-15 Valeo Foods Group Limited (32% Stake)

Ireland (Republic)

Ireland-based company engaged in producing consumer food products including food ingredients and hot beverages

CapVest Partners LLP

United Kingdom

14-Jul-15 Irca S.p.A. (80% Stake) Italy Italy-based provider of ingredients and base food products for pastry-making, baking and ice-cream retailing Ardian France

10-Jun-15 Concord Foods, LLC US US-based manufacturer and supplier of food products and custom ingredients

Arbor Private Investment Company

US

12-May-15 Campus Srl Italy Italy-based company engaged in providing functional ingredients and raw materials for the food industry with focus on the savoury sector and the meat industry

White Bridge Investments S.p.A.

Italy

8-Mar-15 Pinnacle Bakery & Integrated Ingredients Australia Australia-based company engaged in manufacturing and marketing of

bakery ingredients and frozen products Pacific Equity Partners Australia

10-Feb-15 Van de Vries Spice Corporation ; Spiceco, Inc. US;US

US-based company that engages in the import, processing, and supply of food ingredients to food manufacturing, bakery supply, and food distribution industries; US-based supplier of spices

Frontenac Company LLC US

24-Nov-14 Nactis Flavours France Producer of flavouring and aromatic raw ingredients MML Capital UK

31-Mar-14 Novel Ingredient Services, LLC US US-based provider of dietary supplement ingredient solutions GenNx360 Capital

Partners II, L.P. US

28-Feb-14 Optima SRL Italy Italy-based company engaged in the production of ice cream ingredients

The Riverside Company US

24-Jun-13 Edita Food Industries S.A.E. (30% Stake) Egypt

Egypt-based company that manufactures, packages, markets and distributes confectionary products and food related products and ingredients

Actis LLP United Kingdom

7-Feb-13 Adams Flavors, Foods & Ingredients, LLC US US-based manufacturer and distribution of blends, extracts and spices Valesco

Industries, LLC US

5-Dec-12 JMH International, LLC US US based company manufacturer of soup bases, flavour bases, dressings, stock concentrates, sauces, gravies and seasoning blends to custom formulations

Mill City Capital, L.P. US

30-Sep-12 Aquanova Rus ZAO Russia Russia based company engaged in producing natural bioactive substances, antioxidants, colourants and preservatives. RusNano OAO Russia

3-Sep-12 S H Kelkar and Company Limited (33% Stake) India India-based manufacturer of fragrances, flavours and aroma chemicals Blackstone Group

LP US

11-Jan-12 Chr. Hansen A/S (25.66% Stake) Denmark

Denmark-based company that develops natural ingredient solutions such as cultures, enzymes, colours and functional systems for the food, pharmaceutical, nutritional and agricultural industries

Novo A/S Denmark


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5. PEER TRADING ANALYSIS The overall Food Ingredients market is trading at an average EBITDA multiple of 17.7x, significantly influenced by higher multiples in the Specialty-driven Ingredients markets. Specialty-driven Ingredients registered an EV/EBITDA multiple of 20.8x compared to 12.2x for Commodity-driven Ingredients.

EBITDA EBIT Sales (x) EBITDA (x) EBIT (x)

Company Name Mkt Cap (USDm) EV (USDm) LTM LTM LTM LTM LTM

Specialty Driven IngredientsOtsuka Holdings Co., Ltd. 26,807 25,522 12.4% 8.2% 2.3x 18.2x 27.5xGivaudan SA 21,109 22,138 21.0% 16.3% 4.3x 20.5x 26.4xKerry Group Plc Class A 18,738 20,430 14.3% 10.5% 2.8x 19.8x 27.0xMcCormick & Company, Incorporated 12,980 19,015 19.4% 14.8% 3.8x 19.5x 25.6xChr. Hansen Holding A/S 12,223 13,090 34.1% 28.4% 10.5x 30.8x 36.9xSymrise AG 10,993 12,738 19.8% 14.6% 3.8x 19.0x 25.8xInternational Flavors & Fragrances Inc. 10,071 11,487 22.1% 17.9% 3.3x 14.8x 18.4xFrutarom Industries Ltd 5,784 6,307 19.1% 14.3% 4.6x 24.3x 32.4xAngel Yeast Co., Ltd. Class A 4,772 5,207 25.9% 19.1% 5.8x 22.5x 30.4xAAK AB 3,743 4,120 8.3% 6.9% 1.3x 15.8x 18.8xSensient Technologies Corporation 2,931 3,583 19.3% 14.5% 2.6x 13.5x 18.0xNaturex SA 1,530 1,735 14.3% 6.2% 3.8x 26.7x 60.9xMGP Ingredients, Inc. 1,472 1,503 15.3% 15.1% 4.3x 28.1x 28.6xEurogerm SA 227 218 10.7% 8.3% 1.9x 17.4x 22.4x

Mean Mean 18.3% 13.9% 3.9x 20.8x 28.5xMedian Medi 18.7% 14.6% 3.8x 19.6x 26.7x

Commodity Driven IngredientsDowDuPont Inc. 155,675 180,917 13.0% 4.0% 2.6x 19.8x 64.1xAssociated British Foods plc 29,505 29,349 11.8% 8.4% 1.4x 12.3x 17.1xArcher-Daniels-Midland Company 24,579 32,226 4.5% 3.2% 0.5x 11.8x 16.5xRoyal DSM NV 18,523 18,572 17.3% 11.8% 1.8x 10.3x 15.1xBunge Limited 10,028 16,195 2.3% 0.9% 0.4x 15.6x 38.1xIngredion Incorporated 8,073 9,343 18.4% 14.4% 1.6x 8.7x 11.1xTate & Lyle PLC 3,794 4,228 15.8% 9.8% 1.2x 7.5x 12.1xCorbion N.V. 1,925 2,079 17.6% 14.2% 2.1x 11.7x 14.5x

Mean Mean 12.6% 8.3% 1.4x 12.2x 23.6xMedian Medi 14.4% 9.1% 1.5x 11.8x 15.8x

Overall Mean Mean 16.2% 11.9% 3.0x 17.7x 26.7xOverall Median Medi 16.6% 13.0% 2.6x 17.8x 25.7x

Margin (%) EV/

Source: FactSet as of 11 May 2018

PEER TRADING ANALYSIS

Peer Average vs S&P Food & Beverage Index

The Food Ingredients market has outperformed the broader Food & Beverage industry with year-over-year growth of 1.9% a little above the S&P Food & Beverage Select Industry Index (equities classified in the GICS Food & Beverage sub-industry of the S&P Total Market Index). MGP Ingredients saw its stock price appreciate 1,787.5% during the last five years, increasing from $4.63 in May 2013 to $87.39 in May 2018. This appreciation has been fueled by a shift from distillery to premium alcoholic beverage products and increased whiskey sales, which have resulted in near double-digit revenue growth and continued margin expansion. Frutarom, which specializes in ingredients and flavour extracts for the Food & Beverage industry, witnessed a 558.0% increase in share price during the last five years, primarily attributed to acquisitive growth (21 transactions completed in five years) and the low risk and stability of the sector. Specialty-driven Ingredients companies have shown higher share price growth compared to their commodity-driven ingredients peers. In addition, the Specialty Food Ingredients sector has outperformed the broader Food & Beverage industry, driven by continued innovation, new market entrants, increased consolidation, and growing private equity and venture capital investment.

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Peer Average vs S&P Food & Beverage Index

(% change) 5Y 3Y 1Y 6m

Specialty Driven Ingredients

AAK 128.4% 44.6% 18.9% 13.6%

Angel Yeast 494.7% 256.3% 60.3% 4.4%

Eurogerm 195.3% 193.5% 63.0% 57.1%

Frutarom Industries 558.0% 129.3% 62.5% 22.9%

Kerry Group 96.5% 39.8% 10.0% 2.6%

McCormick & Company 43.2% 39.1% 7.0% 10.4%

Naturex 134.4% 122.2% 53.6% 47.5%

Chr. Hansen Holding 175.7% 77.9% 25.1% 3.3%

International Flavors & Fragrances 56.7% 7.0% (2.5%) (14.8%)

MGP Ingredients 1,787.5% 457.0% 62.2% 17.3%

Givaudan 80.0% 31.3% 17.4% 1.6%

Sensient Technologies 71.7% 4.4% (14.3%) (9.1%)

Symrise AG 117.5% 22.7% 9.6% 1.5%

Otsuka Holdings Co., Ltd. 47.0% 38.0% 1.9% 13.3%

Commodity Driven Ingredients

Associated British Foods 36.6% (4.5%) (4.3%) (10.7%)

Archer-Daniels-Midland 29.1% (14.8%) 4.6% 10.7%

Ingredion 56.4% 37.6% (6.0%) (13.5%)

Tate & Lyle (30.7%) (0.3%) (21.5%) (15.4%)

Corbion N.V. 63.2% 38.1% (3.0%) (0.9%)

DowDuPont Inc. 91.6% 29.0% 8.2% (5.0%)

Bunge (1.4%) (20.9%) 1.5% 7.3%

Royal DSM NV 74.0% 69.0% 29.6% 13.2%

Peer Average 39.8% 15.1% 1.9% (2.2%)

S&P Food and Beverage 59.3% 17.0% 0.9% 2.8% Source: FactSet as of 11 May 2018

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Peer Average vs S&P Food & Beverage

0.00

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May-13 Mar-14 Jan-15 Nov-15 Sep-16 Jul-17 May-18

(Inde

xed

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Specialty Driven Peer Average¹ Commodity Driven Ingredients Peer Average² S&P Food & Beverage

Source: FactSet as of 11 May 2018 Note 1: Specialty-driven Ingredients: AAK, Angel Yeast, Eurogerm, Frutarom Industries, Kerry Group, McCormick & Company, Naturex, Chr. Hansen Holding, International Flavors & Fragrances, MGP Ingredients, Givaudan, Sensient Technologies, Symrise and Otsuka. Note 2: Commodity-driven Ingredients: Associated British Foods, Archer Daniels Midland, Ingredion, Tate & Lyle, Corbion, DowDuPont, Bunge and DSM Royal.

Historical EV/NTM EBITDA Analysis

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x


(EV/

NTM

EBI

TDA)

Average -Specialty Driven Ingredients¹ Average -Commodity Driven Ingredients ²


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Historical EV/LTM EBITDA Analysis

5.0x

8.0x

11.0x

14.0x

17.0x

20.0x

23.0x


(EV/

LTM

EBI

TDA)

Average - Specialty Driven Ingredients¹ Average Commodity Driven Ingredients²

Source: FactSet as of 11 May 2018 Note 1: Specialty-driven Ingredients: AAK, Angel Yeast, Eurogerm, Frutarom Industries, Kerry Group, McCormick & Company, Naturex, Chr. Hansen Holding, International Flavors & Fragrances, MGP Ingredients, Givaudan, Sensient Technologies, Symrise and Otsuka. Note 2: Commodity-driven Ingredients: Associated British Foods, Archer Daniels Midland, Ingredion, Tate & Lyle, Corbion, DowDuPont, Bunge and DSM Royal. Total EV/NTM EBITDA vs EV/LTM EBITDA Comparison

5.0x

7.0x

9.0x

11.0x

13.0x

15.0x

17.0x

19.0x


(EV/

(NTM

/LTM

)EBI

TDA)

Total EV/NTM EBITDA Average Total EV/LTM EBITDA Average

Source: FactSet as of 11 May 2018

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Historical Operating Trends

(5.0%)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2016 2017 2018E 2019E 2020E

Specialty Revenue Growth¹ Commodity Revenue Growth²

Specialty EBITDA Margin Commodity EBITDA Margin


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-

6. GLOBAL M&A PARTNERS – FOOD & BEVERAGE TEAM

EUROPE

Michael Petit* Heike Jandl AUSTRIA

Managing Director Tel.: +43 1 99 00 220-0

Email ID: [email protected]

Benoit Roose BELGIUM

Partner Tel.: +32 2 627 51 21


Philipp Elsen GERMANY

Project Manager Tel.: +49 211168 0228


FRANCE Managing Director

Tel.: +33 6 30 80 71 66 Email ID:

[email protected]

Pal Farkas Ivars Pinkulis

LATVIA Partner

Tel.: +371 67212324 Email ID:

[email protected]

Ronald van Rijn Frederic de Boer HUNGARY NETHERLANDS SWITZERLAND

Partner Partner Partner Tel.: +36 1 275 1116 Tel.: +31 (0) 6 533 409 75 Tel.: +41 44 755 59 99

Email ID: Email ID: Email ID: [email protected] [email protected] [email protected]

AMERICAS

Daniel Gomez* UNITED STATES

Director Tel.: +1 312.658.4789


Paulo Cury BRAZIL

Managing Director Tel.:+551126190060


Ian Macdonell CANADA

Managing Director Tel.: +1 416.362.1953


Luis Ortiz MEXICO Partner

Tel.: +52 555520 3144 Email ID:

[email protected]

RoW

Paul Hawkins AUSTRALIA

Managing Director Tel.: +6128379 0505


Bingyu Chen CHINA Partner

Tel.: +86-106520 2002 Email ID:

[email protected] *Key Contacts

mailto:[email protected]














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ABOUT Global M&A Partners

Established in 1999, Global M&A Partners is comprised of independent investment banking firms structured to provide international scope and local market expertise for clients. With more than 200 M&A professionals, Global M&A Partners has deep industry experience in multiple sectors including Food & Beverage, Consumer Products, Business Services, Energy & Mining, Healthcare & Pharmaceuticals, Industrials, Packaging, Leisure & Retail and Information Technology. The partnership operates in over 50 countries across 5 continents and has completed over 1,500 transactions with a combined value in excess of €42 billion over the last 5 years. M&A transactions typically range between €20-€500 million.

Selected Transactions in Food & Beverage Ingredients

Documents

The Global Food - Condere · Growth in food preservatives is mainly expected to come from emerging markets, particularly China. Anti-microbials Anti-microbials inhibit the growth