Food and beverage recapFourth quarter 2017

Food and beverage paradigm shiftA consumer-driven paradigm shift isoccurring in the food and beverage sector,impacting the entire value chain. Ownersof food and beverage companies shouldstrategically assess how to remain relevantto consumers in a dynamic environment.Three such strategies are portfoliooptimization, seed investments and acombination of both.The convergence of the technology andfood sectors — combined with the changingmanner in which consumers demand andconsume products — is fundamentallyrevolutionizing the food and beverageindustry. Historically, the food and beverageindustry has had to respond to variousforces, including regulatory changes,industry consolidation and demographicshifts. The current wave of disruption isbeing driven by consumers, enabled bytechnology, representing a paradigm shiftto the entire food supply chain.Consumer demands are becoming broader,and powerful social media platformscan disseminate information that foodmanufacturers cannot as easily influence.For example, consumers are demandingproducers employ sustainable farmingtechniques and are seeking transparencyfrom processors in the sourcing andingredients in food. Distributors andretailers are being challenged to haveproducts available to consumers almost

instantaneously and are continuing to evolve rapidly with changing technology, particularly as behemoth e-retailers such as Amazon broaden their influence in the food market.Historically, we’ve observed companies employing a strategy of overhead cost reductions in order to maintain margins. However, simply trimming the fat is not going be enough for manufacturers and retailers to adapt to this changing world. Executives must assess how to evolve their product portfolios to stay relevant to customers and meet the industry’s rapidly changing drivers. Regardless of a company’s specific role in the value chain, a rigorous portfolio optimization analysis should be completed in the context of the entire supply chain. Executives should classify products into three categories: • Invest – Business and product lines that

are in attractive segments and/or are financially material to the company

• Hold – Core product lines that may have limited organic growth, but are still integral to the group of brands with longlasting consumer demand

• Sell – Stale or underperforming business or product lines not aligned with changing consumer preferences that should be divested

Allocating brands or business lines into these categories will provide a roadmap for financial growth, capital allocation and overall shareholder returns. As well as reviewing and rejuvenating current portfolios and delivery channels, a number of organizations are using seed investments to diversify their business in an uncertain and evolving industry. This strategy entails making investments in up-and-coming products, brands or distribution channels as a way to gain exposure to products or companies that are more aligned with dynamic consumer demands. There were several examples of global food conglomerates making seed investments in 2017, and they continue to illustrate that growth and innovation trade at a premium. Seed investments tend to be small relative to the purchaser’s platform revenue, but provide essential access to higher-growth product portfolios at a time when the food industry is being fundamentally reinvented.Both portfolio optimization and seed investments can be value-enhancing strategies when used effectively. This paradigm shift, like those before it, will separate those who are able to excel at adapting to changing consumer behaviour from those who are not.

2 | Food and beverage recap Fourth quarter 2017 Data source: Capital IQ Inc.

Following are brief summaries of selected transactions in the North American food and beverage industry from the fourth quarter of 2017:

All currencies in US$ unless otherwise stated. Natural foods • Toronto, ON- based GreenSpace Brands Inc.

has entered into an agreement to acquire Galaxy Nutritional Foods, Inc. for $16.9 million. The transaction represents an enterprise value of approximately 1.0 times revenue. Galaxy Nutritional Foods, Inc., based in North Kingston, RI, produces plant-based cheese alternative products from rice, soy beans, and potatoes in the US, under the Go Veggie brand.

Health / Wellness • Vaud, Switzerland-based Nestlé Health Science

S.A. has entered into an agreement to acquire Atrium Innovations Inc. for $2.3 billion.Atrium Innovations Inc., based in Quebec, QC, manufactures science-based and professionally endorsed products for the health and nutrition industry in Canada, the US, Germany and the Netherlands.

• San Francisco, CA- based TSG Consumer Partners has acquired LuckyVitamin Corp. The financial terms of the transaction were not disclosed. LuckyVitamin Corp., based in Norristown, PA, operates as an online retailer of vitamins, nutritional supplements, herbs, body building, green living, organic and natural products.

Restaurants• London, UK-based YO! Sushi Group Ltd. has

acquired Bento Sushi for CAD$100 million. The transaction represents an enterprise value of approximately 1.3 times revenue and 9.5 times EBITDA.Bento Sushi, based in Markham, ON, makes fresh quick-service sushi sold at kiosks and sushi bars in the grocery channel in both Canada and the US. EY acted as an independent financial advisor to the shareholders of Bento Sushi.

• New York, NY-based Apollo Global Management, LLC has entered into an agreement to acquire Qdoba Restaurant Corp. for $310 million.Qdoba Restaurant Corp., based in Lakewood, CO, operates and franchises a chain of Mexican fast casual restaurants in the US, Canada, Africa and Asia.

• Saint-Laurent, QC- based MTY Food Group Inc., has entered into an agreement to acquire Imvescor Restaurant Group Inc. for CAD$275.7 million. The transaction represents an enterprise value of approximately 5.4 times revenue and 16.4 times EBITDA.Imvescor Restaurant Group Inc., based in Montreal, QC, operates franchised and corporate restaurants under the Pizza Delight, Toujours Mikes, Scores and Bâton Rouge brands in Eastern Canada.EY acted as financial advisor to the Special Committee of the Board of Imvescor Restaurant Group Inc.

• Atlanta, GA-based Arby’s Restaurant Group, Inc., has entered into an agreement to acquire Buffalo Wild Wings Inc. for $2.5 billion. The transaction represents an enterprise value of approximately 1.4 times revenue and 11.3 times EBITDA.Buffalo Wild Wings Inc., based in Minneapolis, MN, operates and franchises an American casual dining restaurant and sports bar concept.

• Saint-Laurent, QC-based MTY Food Group Inc., has acquired CB Franchise Systems, LLC and Built Franchise Systems, LLC for $24.6 million. This transaction represents an enterprise value of approximately 0.3 times revenue and 6.0 times EBITDA. CB Franchise Systems, LLC, and Built Franchise Systems, LLC, based in Culver City, CA, operate quick-service restaurants under the names The Counter and Built Custom Burgers.

• Atlanta, GA-based NRD Capital Management, LLC, has acquired Ruby Tuesday, Inc. for $362.58 million. The transaction represents an enterprise value of approximately 0.3 times revenue and 8.5 times EBITDA.Ruby Tuesday, Inc., based in Maryville, TN, operates and franchises casual dining restaurants.

• Vaughan, ON-based Cara Operations Ltd., has acquired Pickle Barrel Group of Restaurants for CAD$23.6 million.Pickle Barrel Group of Restaurants, based in Markham, ON, operates a chain of upscale casual dining restaurants and bars.

Snacks• Hershey, PA-based The Hershey Co., has entered

into an agreement to acquire Amplify Snack Brands, Inc. for $1.5 billion. The transaction represents an enterprise value of approximately 4.1 times revenue and 18.4 times EBITDA.Amplify Snack Brands, Inc., based in Austin, TX, manufactures snack products in North America and internationally.

• Camden, NJ-based Campbell Soup Co., has entered into an agreement to acquire Snyder’s-Lance, Inc. for $6.0 billion. The transaction represents an enterprise value of approximately 2.7 times revenue and 21.3x times EBITDA.Snyder’s-Lance, Inc., based in Charlotte, NC, manufactures snack food products in the US and internationally.

• McLean, VA-based Mars, Incorporated, has entered into an agreement to acquire an undisclosed minority stake of Kind LLC. The financial terms of the transaction were not disclosed.Kind LLC, based in New York, NY, manufactures bars, grains bars, breakfast bars, fruit snacks and grains clusters.

• Mississauga, ON-based Nustef Baking Ltd. has acquired Kii Naturals Inc. The financial terms of the transaction were not disclosed.Kii Naturals Inc., based in Vaughan, ON, manufactures snack food products for the natural food market in North America.

• Battle Creek, MI-based Kellogg Co., has acquired Chicago Bar Co. LLC for $600 million. Chicago Bar Co. LLC, based in Chicago, IL, manufactures food protein bars in the US.

Alcoholic beverages• Mexico City, Mexico-based Becle, S.A.B. de

C.V., has entered into an agreement to acquire Pendleton Whisky Brands of Hood River Distillers, Inc. for $205 million.Pendleton Whisky Brands of Hood River Distillers, Inc., based in the US operates as a premium blended whiskey brand.

Beverages• Canonsburg, PA- based Dunn’s River Brands,

LLC, has entered into an agreement to acquire Sweet Leaf Tea and Tradewinds businesses of Nestlé Waters North America Inc. The financial terms of the transaction were not disclosed. Sweet Leaf Tea and Tradewinds businesses of Nestlé Waters North America Inc., based in the US, operates as a brand of ready-to-drink tea.

• Rosslyn, VA- based Nestlé USA, Inc., has acquired Chameleon Cold Brew, LLC. The financial terms of the transaction were not disclosed. Chameleon Cold Brew, LLC, based in Austin, TX, manufactures concentrated organic coffee, including both concentrates and readyto-drink flavors.

• Englewood Cliffs, NJ-based Unilever United States, Inc., has acquired Tazo Tea Co. from Starbucks for USD$384 million. The transaction represents an enterprise value of approximately 3.4 times revenue. Tazo Tea Co., based in Portland, OR, provides tea and herbal beverages.

Packaged foods• Chicago, IL based Conagra Foods signed an

agreement to acquire the Sandwich Bros. of Wisconsin brand from Kangaroo Brands Inc. The financial terms of the transaction were not disclosed.Sandwich Bros. of Wisconsin produces frozen breakfast and flatbread sandwiches.

• Chicago, IL, based Wind Point Partners has acquired STIR Foods, LLC. The financial terms of the deal were not disclosed. STIR Foods, LLC, based in Orange, CA, manufactures ready-to-serve food products, including soups, stews, chilis and sauces.

• Tel Aviv, Israel-based Romana Food Brands Corp. has acquired Les Aliments Pizza Romana Inc. The financial terms of the deal were not disclosed.Les Aliments Pizza Romana Inc., based in Montreal-Nord, QC, operates as a private label pizza manufacturer as well as certain branded products.

• Richmond, BC-based Premium Brands Holdings Corp. has acquired Raybern Foods, LLC. The financial terms of the deal were not disclosed.Raybern Foods, LLC, based in Hayward, CA, manufactures sandwiches and distributes through retailers across the US.

• Granby, QC-based L.B. Maple Treat Corp. has acquired Decacer for CAD$40 million.Decacer, based in Saint-Nicolas, QC, manufactures and processes maple flakes and maple syrups.

3Food and beverage recap Fourth quarter 2017 |

EY Orenda* food and beverage index Enterprise value trends by sector

EY Orenda food and beverage index Enterprise value trends by country

EY Orenda food and beverage index North American transaction volume and size

Note: The indices used in this newsletter have been compiled by Ernst & Young Orenda Corporate Finance Inc. solely for illustrative purposes. The companies chosen are publicly traded companies that are commonly used for industry composites to show stock performances within a sector. The indices do not include all public companies that could be categorized within each sector, and were not created as benchmarks, nor should they imply benchmarking or recommendations for a particular stock and/or sector.

Charts: EY Orenda Corporate Finance Inc.

Data source: Capital IQ, Inc., Bloomberg * Ernst & Young Orenda Corporate Finance Inc.

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Food processing Beverages Grocery & convenience retail Restaurant & food service

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Ernst & Young Orenda food and beverage index - North American transaction volume and size

Number of transactions Aggregate transaction value

1 Q1 2015 figure exludes Heinz's acquisition of Kraft Foods Inc. ($62B) for presentation purposes.

1

EY Orenda food and beverage index Our food and beverage index consists of the following publicly traded companies:

US food and beverage companies

Ticker symbol

Food processing

Tyson Foods TSNThe Kraft Heinz Company Mondelez International, Inc.

KHC MDLZ

General Mills, Inc. GISConAgra Foods, Inc. CAGDean Foods Company DFCampbell Soup Company CPBMcCormick & Company, Incorporated

MKC

Hormel Foods Corporation HRLThe Hershey Company HSYKellogg Company K

BeveragesThe Coca-Cola Company KOPepsico, Inc. PEPConstellation Brands Inc. STZ

Grocery and convenience retailSuperValu Inc. SVUKroger Co. KRWeis Markets, Inc. WMK

Restaurant and foodserviceStarbucks Corporation SBUXMcDonald’s Corp. MCDJack in the Box Inc. JACKYum! Brands, Inc. YUMDarden Restaurants, Inc. DRIBrinker International, Inc. EATDine Equity Inc. DIN

Canadian food and beverage companies

Ticker symbol

Food processingMaple Leaf Foods Inc. MFIGeorge Weston Limited WNSaputo Inc. SAPHigh Liner Foods Inc. HLF

BeveragesMolson Coors Brewing Company

TAP

Cott Corporation BCBLassonde Industries Inc. LAS.AAndrew Peller Limited ADW.ACorby Spirit & Wine Limited CSW.A

Grocery and convenience retailLoblaw Companies LMetro Inc. MRU.AAlimentation Couche-Tard Inc. ATD.B

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© 2018 Ernst & Young Orenda Corporate Finance Inc. © 2018 Ernst & Young Corporate Finance (Canada) Inc.

2545747ED None

The information and opinion within this document has been derived from various sources of research including but not limited to Capital IQ, Loblaw Companies Limited Press Releases, Post News Releases Legalweek, RBC Economics, Bloomberg, Just-Food, Canadian Grocer and Hoovers.

This publication contains information in summary form, current as of the date of publication, and is intended for general guidance only. It should not be regarded as comprehensive or a substitute for professional advice. Before taking any particular course of action, contact Ernst & Young or another professional advisor to discuss these matters in the context of your particular circumstances. We accept no responsibility for any loss or damage occasioned by your reliance on information contained in this publication.

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Canadian Food and Beverage LeaderStephen Dewis Toronto, Ontario +1 416 943 2063 stephen.dewis@ca.ey.com

Data source: Capital IQ Inc.

• Springdale, AR-based Tyson Foods, Inc., has acquired Original Philly Holdings, Inc. The financial terms of the deal were not disclosed. Original Philly Holdings, Inc., based in Philadelphia, PA, manufactures sandwich steak and cheesesteak appetizer products.

• Morris Plains, NJ-based Freiberger USA Inc., has entered into an agreement to acquire Richelieu Foods Inc. for $435 million. The transaction represents an enterprise value of approximately 1.3 times revenue and approximately 11 to 13 times EBITDA. Richelieu Foods Inc., based in Braintree, MA, manufactures private label food products.

Protein• Mississauga, ON-based Maple Leaf Foods Inc., has entered into an

agreement to acquire Field Roast Grain Meat Co., Inc. for $120 million. The transaction represents an enterprise value of approximately 3.2 times revenue and approximately 13.5 times EBITDA. Field Roast Grain Meat Co., Inc., based in Seattle, WA, produces alternative protein products including artisan vegan meats and cheeses and distributes through various retailers across North America.

• Austin, MN-based Hormel Foods Corp., has acquired Columbus Manufacturing, Inc. for $850 million. The transaction represents an enterprise value of 2.8 times revenue.Columbus Manufacturing, Inc., based in Hayward, CA, produces salamis and deli meats through retailers across the US.

Seafood• St George, NB- based Cooke Inc. has acquired Omega Protein Corp. for

$508.65 million. The transaction represents an enterprise value of 1.4 times revenue and 8.1 times EBITDA.Omega Protein Corp., based in Houston, TX, produces animal nutrition and human nutrition products.

• Norway-based Marine Harvest ASA has agreed to acquire Northern Harvest Sea Farms for CAD$320 million.Northern Harvest Sea Farms, based in New Brunswick, Canada, produces and sells farmed salmon products worldwide.

• Toronto, ON-based Ontario Teachers’ Pension Plan Board has acquired Atlantic Aqua Farms Partnership. The financial terms of the deal were not disclosed. Atlantic Aqua Farms Partnership, based in Orwell Cove, PE, produces and distributes live mussels in North America.EY provided Transaction Advisory Services to Ontario Teachers’ Pension Plan Board.

Confectionery• New York, NY-based Vestar Capital Partners, Inc. has entered into an

agreement to acquire Nonni’s Foods LLC. The financial terms of the deal were not disclosed. Nonni’s Foods LLC, based in Tulsa, OK, manufactures biscotti and related products.

Dairy • Montreal, QC-based Saputo Inc. has acquired Betin, Inc. for CAD$$340 million.

The transaction represents an enterprise value of 2.3 times revenue.Betin, Inc., based in Rolling Hills Estates, CA, produces goat cheese and organic chevre products.

• Mississauga, ON-based Gay Lea Foods Co-operative Ltd. has entered into an agreement to acquire Alberta Cheese Company Ltd. The financial terms of the deal were not disclosed.Alberta Cheese Company Ltd., based in Calgary, AB, produces Italian cheese products.

Frozen foods• Richmond, BC-based Premium Brands Holdings Corp. has acquired

Buddy’s Kitchen, Inc. and 50% stake in Shaw Bakers. The financial terms of the deal were not disclosed.Buddy’s Kitchen, Inc., based in Burnsville, MN, produces and distributes custom frozen sandwiches, breakfast sandwiches, omelets and breakfast entrees while Shaw Bakers LLC, based in San Francisco, CA, manufactures and distributes fresh and frozen breads and sweet and savory pastries.