Duff Phelps Food and Agribusiness Q4 2010 FINAL

Q4

2009

A Look into 2010: Improved Market Stability Expected

Despite the positive GDP growth in the third quarter of 2009, an indication that the recession is technically over, many domestic food and agribusiness market participants have yet to experience any significant economic recovery. The slight improvement in certain macroeconomic factors may lead to much needed aid in 2010 for market constituents, including consumers, processors, and farmers. The shift in consumers’ preferences for higher priced items in the healthy and organic categories has temporarily subsided as today’s consumer desires economical, private label, comfort foods.

Macroeconomic FactorsA number of analysts expect that the weakened macroeconomic environment in 2009 will persist into 2010. Projections for key economic indicators provided in the December 2009 edition of Standard & Poor’s (“S&P”) Industry Surveys: Trends & Projections are highlighted in the below chart.

Key U.S. Macroeconomic Indicators

Food and AgribusinessIndustry InsightsInside

H. Glen ClarkeManaging Director+1 312 697 [email protected]

Contact

5 Merger and AcquisitionActivity

Inside

Commodity Review9

Comparable Company Analysis

Stock Price Performance and Public Market Variations11

12Duff & Phelps Experience15

2008A 2009E 2010P

Nominal Gross Domestic Product growth 2.6% -1.4% 3.1%

Average unemployment rate 5.8% 9.3% 10.3%

Disposable personal income growth 3.9% 1.4% 2.8%

Consumer Price Index 3.8% -0.3% 1.8%

U.S. Dollar appreciation -4.4% 4.4% -10.3%

Source: S&P Industry Surveys: Trends & Projections, December 2009

2 | Food and Agribusiness Industry Insights Q4 2009


Growth in nominal GDP is expected to be 3.1% driven by the depletion in consumer goods inventories, increased automotive sales, and the strengthening of consumer confidence. The national unemployment rate is expected to increase from 9.3% to an average of 10.3% in 2010 as employers remain cautious to increase workforces. The tight employment market and limited wage increases will result in slight increases in disposable personal income, from an estimated 1.4% growth in 2009 to 2.8% growth in 2010. Although the strength of the dollar against foreign currencies improved during the first half of 2009, the dollar exhibited weakness later in the year, and S&P expects the weakness to continue into 2010.

Commodity Prices / Farming Trends: Moderately High Commodity PricesAgricultural commodities have displayed significant volatility over the past two years, peaking in mid-2008, due in part to increased speculative commodity trading. While most commodity price fluctuations have stabilized, current agricultural input crop prices remain higher than average norms; the S&P’s crop price index (made up of wheat, corn, soybeans, sugar, and milk commodities) in October 2009 was 35% higher than the October 2006 value. The long-term commodity price appreciation has been driven by expanded overseas demand, alternative usage for grains (i.e. corn used in ethanol, animal feed, and sweeteners), increases in input costs incurred by farmers and a weakening of the U.S. Dollar.

Precipitation levels and chilly temperatures delayed the harvesting of sugar beet, potatoes, cotton, corn, and soybeans during the fall and winter of 2009, which has led to decreased supply and a temporary increase in those commodity prices. However, commodity prices are expected to moderate in 2010 due to the record corn and soybean harvests in 2009 and conducive weather patterns. According to an article in the February 9, 2010 edition of the Wall Street Journal, corn and soybean prices dropped 16% and 7%, respectively, between January 12, 2010 and February 8, 2010 in response to a U.S. Department of Agriculture (“USDA”) report announcing record production of these crops during 2009. Further downward price pressure followed the USDA’s world supply and demand report release on February 9, which announced bumper 2009 crops for certain countries, including a 14% increase in soybean production in Brazil. Additionally, the spring crop acreage report, which will reveal how U.S. farmers are reacting to pricing and demand factors, will be published on March 31.

Despite the expected 2010 bumper corn and soybean crop, strong yields and global demand should alleviate pressure on farmers that have suffered through periods of fluctuating commodity prices and increased operating costs. Since crop supplies are adequate to meet U.S. demand, the weakened dollar should allow U.S. farmers to continue to be major suppliers to the worldwide agricultural market.

Food and Agribusiness Industry Insights Q4 2009 | 3


Consumer Trends: Demand for Inexpensive Comfort FoodsDue to the continued soft economy, consumers are not expected to radically alter their spending habits during 2010. However, consumers have placed a greater importance on the safety of food produced domestically and internationally following a number of product recalls in recent months. Relatively low food price inflation, in conjunction with increased promotional activity by food retailers, will limit price increases to consumers. Continued household financial stress will result in the consumption of meals prepared at-home at the expense of restaurants. Consumers are focused on preparing value-oriented meals, including economical, comfort foods such as pasta and soup, as well as ‘brown-bagging’ lunches. The consumers’ continued shift towards purchases of private label food products are driven by lower price points of 30% to 50% compared to the branded equivalents, as well as improved product quality, according to the November 10, 2009 report from Morgan Stanley Research.

Y-o-Y Percentage Changes in Food Price Indices

Despite the consumers’ short term demand for value products, sales of healthy, organic, locally-grown, and ethnic foods will continue to grow moderately.

• An increasingly aged and health-conscious U.S. population continues to demand natural and organic foods that offer health-enhancing and functional benefits, but premium pricing of these products has resulted in diminished short-term sales.

• Environmental concerns have caused consumers to demand sustainable, locally-grown food products. • The changing demographics will generate demand for ethnic foods.

2005 2006 2007 2008 2009F1 2010F1

Food at home 1.9% 1.7% 4.2% 6.4% 0.5% to 1.5% 2.5% to 3.5%

Cereal & bakery products 1.5% 1.8% 4.4% 10.2% 3.0% to 4.0% 3.0% to 4.0%

Meats, poultry, fish & eggs 2.4% 0.8% 3.8% 4.2% 0.0% to 1.0% 1.5% to 2.5%

Dairy & related products 1.2% -0.6% 7.4% 8.0% -7.0% to -6.0% 2.5% to 3.5%

Fruits & vegetables 3.7% 4.8% 3.8% 6.2% -2.5% to -1.5% 3.0% to 4.0%

Nonalcoholic beverages 2.9% 2.0% 4.1% 4.3% 2.0% to 3.%0 2.5% to 3.5%

Sugar & sweets 1.2% 3.8% 3.1% 5.5% 5.0% to 6.0% 3.5% to 4.5%

Fats & oils -0.1% 0.2% 2.9% 13.8% 2.5% to 3.5% 4.0% to 5.0%

Other prepared foods 1.6% 1.4% 1.8% 5.2% 4.0% to 5.0% 2.5% to 3.5%

Food away from home 3.1% 3.1% 3.6% 4.4% 3.0% to 4.0 % 3.5% to 4.5%

All food 2.4% 2.4% 4.0% 5.5% 1.5% to 2.5% 3.0% to 4.0%

Source: US Bureau of Labor Statistics(1) 2009 and 2010 Forecast as of December 24, 2009


Processor Trends: Private Label Continues to Take Market ShareImproved productivity and increased volumes are expected to drive profit expansion for the large branded food and beverage companies in 2010, according to a report from Deutsche Bank Securities Research published on January 5th. Volatility in commodity prices has presented operating challenges to these manufacturers in recent years. Branded processors were unable to increase pricing during the current recession in fear of losing price-sensitive customers and thus have focused on productivity improvements to maintain or enhance margins. According to Deutsche Bank Securities Research, the average large branded manufacturer generates approximately 4% of its gross profit from recent process improvement investments such as internal cost containment initiatives, supply chain efficiency, shedding less profitable products, and upgraded IT systems. One example of a recent cost saving initiatives is PepsiCo’s acquisition of the Pepsi Bottling Group and PepsiAmericas in April 2009. Savings from the cost initiatives will be invested in additional marketing efforts to promote their brands. As such, further margin expansion will be driven by modest volume increases of 3% driven by improved consumer confidence and improved marketing promotions.

Along with food safety concerns, continued consumer demand for private label products is among the greatest threats to branded processors in the near term. S&P believes that diminished brand loyalty among consumers will create pressure on branded processors to protect market share through increased marketing and promotions. Second- and third-tier brands with limited spending power may continue to lose market share to private label. Additionally, retailers will continue to promote their private label products due to higher margins, increased loyalty from cost-conscious customers, and greater bargaining power against the branded manufacturers.

In the long run, it is expected that branded companies will target foreign markets for growth. Developing markets, such as Eastern Europe, Asia, and certain Latin American countries where economic and consumer income growth persist, present substantial opportunities for sales and profit growth. Domestic branded processors will need to either adapt their products to meet the local consumers tastes or acquire businesses in these countries. Recent high profile international deals by U.S.-based processors include Kraft’s acquisition of Cadbury, Dean Foods’ acquisition of Alpro NV, and Coca-Cola’s unsuccessful attempt to purchase China’s Huiyuan Juice Group.

Another threat to branded processors and food manufactueres is the concerns around food safety and traceability for domestically-produced and internationally-sourced products. High-profile outbreaks of food-borne illnesses have persisted, including Beef Products, Inc.’s recall of meat products in late 2009 and Peanut Corporation of America’s salmonella-contaminated peanuts in early 2009. Other animal-borne illnesses, specifically swine flu, have led to substantial disruption in the protein sector. Multiple U.S. government initiatives and bills have been proposed to upgrade food safety systems and provide federal agencies with greater authority to enforce food safety standards. S&P expects increased food quality control issues, resulting from heightened global agricultural trade and product sourcing, which makes monitoring significantly more difficult.


Merger and Acquisition Activity

U.S. Food and Agribusiness M&A TrendsAlthough aggregate deal volume for transactions under $10 billion declined in 2009, total deal value increased compared to 2008. While the lack of lending has limited the ability of acquirers to finance larger transactions, strategic buyers with strong balance sheets have made significant acquisitions. Other larger strategic players have utilized the current low interest rate environment to refinance their debt obligations and strengthen their balance sheets, placing them in a better position to make future deals. Five domestic deals exceeding $1 billion were announced at enterprise value during 2009, the same number of deals over $1 billion during 2008.

Domestic M&A Deal Value and Volume

Although deal activity within this sector has been limited, large (over $1 billion) deals were completed in 2009. These deals are noteworthy for the existence of cross border activity, as three of the five deals involved a foreign buyer or seller. Deals over $1 billion occurring in 2009 include K+S Aktiengesellschaft’s acquisition of Morton International from Rohm and Haas for $1.7 billion; Viterra’s acquisition of ABB Grain for $1.7 billion; PepsiCo’s acquisition of Pepsi Bottling Group and PepsiAmericas for $7.8 billion; JBS USA’s acquisition of Pilgrim’s Pride out of bankruptcy for $2.9 billion; and Pinnacle Foods’ acquisition of Birds Eye foods for $1.5 billion, prior to Birds Eye’s initial public offering. In addition, in mid-January 2010, Kraft Foods agreed to acquire Cadbury, a British confectionary producer, for $22.3 billion.


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Total Deal Value ($ in bn)Aggregate Deal Volume

Excludes deals over $10 billion in value.Source: Capital IQ

Seed

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Processed Foods

Other Beverages

Other Agriculture

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2009

2008

Alcoholic Beverages

0 10 20 30 40 50 60Total Domestic M&A Deals

No particular subsector of the food and agribusiness industries dominated M&A activity during 2009.

Domestic Food and Agribusiness M&A Volume by Subsector



M&A Outlook Industry analysts expect M&A to be a key vehicle in driving growth for food and agribusiness companies. Deutsche Bank believes that boards and management of mature food and agribusiness companies are placing greater focus on long-term growth drivers including scale, productivity, and threat of increased retailer power, and M&A is viewed as an easier way to alleviate these concerns. Acquisitions also allow companies to enter new geographic markets and expand product offerings. According to Deutsche Bank, the continued tightness in the credit markets is expected to hold valuations below historical levels, providing companies with strong balance sheets and free cash flow with a prime acquisition market. According to a February 5, 2010 article in The Daily Deal, studies by Robert W. Baird & Co., William Blair & Co. LLC and Madison Williams & Co. LLC conclude that middle market M&A will rebound in 2010 due to large cash positions held by strategics, revived interest from private equity groups, and recovering equity and debt markets. Robert W. Baird notes, these factors, particularly the rapidly improving credit markets and an increase in CEO confidence, could be the catalysts needed for a robust M&A environment that could resemble 2004—the last time the U.S. economy came out of a recession.

Notable Deal of the Fourth Quarter 2009: Nestlé S.A. acquires Vitality Foodservice, Inc. In December 2009, a subsidiary of Nestle S.A., which produces branded hot and cold non-carbonated beverage solutions for the foodservice channel, completed the acquisition of Vitality Foodservice, Inc. (“Vitality”) from private equity firms MVC Capital, Inc. and Goldner Hawn Johnson & Morrison, Inc., for approximately $210 million in cash. Vitality Foodservice offers coffees, teas, juices, and other non-carbonated, non-alcoholic beverages, and related dispensing equipment to the restaurant, lodging, cruise line, healthcare, travel and leisure, military and corrections, education and gaming industries in the United States, Canada, Europe, Asia, and the Caribbean. The acquisition allows Nestlé Professional, the subsidiary, to expand its product offering and customer base within the foodservice industry and become the recognized leader in branded hot and cold non-carbonated beverage solutions in North America. Vitality was acquired by a group of private equity firms in 2004. Vitality generated approximately $220 million in revenues during the latest twelve month period ended November 2009, implying a 0.9x revenue multiple.

Source: Capital IQ



AnnouncedDate Seller (Target) Subsector Parent Rationale

Enterprise Value

($US million)

12/31/09Maui Land & Pineapple Co. Inc. (Haliimaile Pine-apple Co.)

Processed Foods Investor group Private equity NA

12/23/09 HJ Heinz Co. (Appetizers And, Inc.) Processed FoodsBrazos Private Equity (Golden County Foods, Inc.)

Product line diversification NA

12/21/09 Jones Soda Co. (NasdaqCM:JSDA) Other Beverages Big Red, Inc. Consolidation 2.2

12/21/09 Angostura International Ltd. Processed Foods Mizkan Americas, Inc. Product line diversification 2.7

12/20/09 HM Capital Partners LLC (Sturm Foods, Inc.) Processed Foods Treehouse Foods, Inc. Consolidation 660.0

12/17/09CapitalSouth Partners, Harbert Mezzanine Partners, and Azalea Capital (Spartan Foods Of America, Inc.)

Processed Foods Linsalata Capital Partners Private equity NA

12/16/09 Authentic Mexican, Inc. Processed Foods M&S Fine Foods, Inc. Product line diversification NA

12/14/09U.S. Mills, Inc. (Uncle Sam and Erewhon Cereal brands)

Processed Foods Attune Foods, Inc. Product line diversification NA

12/11/09 Yorktown Bakery LLCBaked Goods / Snack Foods

David's Cookies, Inc. Consolidation NA

12/11/09 U.S. Mills, Inc. (Farina Mills brand assets) Processed Foods Malt-O-Meal Company Consolidation NA

12/8/09 Parent Seed Farms Ltd. Seed Alliance Grain Traders, Inc. Product line diversification 9.4

12/3/09 Green Meadows Foods, LLC DairyAgropur Cooperative (Trega Foods Ltd.)

Consolidation NA

12/3/09 Whitaker Foods, Inc. Processed Foods Advance Food Company, Inc. Product line diversification NA

12/2/09 Castle Brands, Inc. (Sam Houston brand) Alcoholic BeveragesWestern Spirits Beverage Company, LLC

Consolidation NA

11/30/09 Otter Creek Brewing, Inc. Alcoholic Beverages Long Trail Brewing Company Consolidation NA

11/30/09 C.J. Foods, Inc. Processed Foods Trinity Hunt Partners Private equity NA

11/27/09 Cains Foods (Westminster Cracker Company, Inc.)Baked Goods / Snack Foods

LaSalle Capital Group, L.P. Private equity NA

11/25/09 XT-2000, Inc. And Xtermite, Inc. Other AgricultureOrganic Products International Corp.

Consolidation NA

11/24/09 Thompsons Limited (Hyland Seeds) Seed Dow Agro Sciences Canada. Inc. Consolidation NA

11/23/09 HydraLogic Systems, Inc. Other Agriculture Equity Capital Management plc Private equity 5.0

11/23/09 Arthurs Fresh Company Ltd. Other Beverages H.J. Heinz Company of Canada Ltd. Product line diversification NA

11/20/09 MGP Ingredients, Inc. (Illinois Corn Processing, LLC) Alcoholic Beverages SEACOR Energy, Inc. Product line diversification 30.0

11/20/09 Birchmere Capital Management LLC (Penn Brewery) Alcoholic Beverages Investor group Private equity NA

11/19/09 Diedrich Coffee, Inc. Other BeveragesGreen Mountain Coffee Roasters, Inc.

Consolidation 224.5

Select Domestic Mergers and Acquisitions, October 1, 2009 through December 31, 2009

Source: Capital IQ



Select Domestic Mergers and Acquisitions, October 1, 2009 through December 31, 2009

AnnouncedDate Seller (Target) Subsector Parent Rationale

Enterprise Value

($US million)

11/19/09Goldner Hawn Johnson & Morrison and MVC Capital (Vitality Foodservice, Inc.)

Other Beverages Nestle S.A. (Nestle Professional) Consolidation 208.0

11/18/09 Vestar Capital Partners (Birds Eye Foods, Inc.) Processed FoodsThe Blackstone Group (Pinnacle Foods Finance LLC)

Consolidation 1,434.1

11/16/09 Source Verified Foods, LLC (Vande Rose Farms, LLC) Protein Tigerhawk Proteins, LLC Consolidation NA

11/13/09Sun Capital Partners (Timothy’s Coffees of the World, Inc.)

Other BeveragesGreen Mountain Coffee Roasters, Inc.

Consolidation 157.0

11/12/09 Kraft Foods, Inc. (Balance Bar Company)Baked Goods / Snack Foods

Brynwood Partners Private equity NA

11/11/09GE Capital Corp. (Farmland Dairies, LLC / New Jersey facility)

Dairy Grupo Lala, S.A. De C.V. Globalization NA

11/9/09 ERTH Solutions, Inc. Other Agriculture Outlook Resources, Inc. Product line diversification 1.4

11/5/09 United Liquor Alliance, Inc. Alcoholic Beverages RMD Entertainment Group Consolidation NA

11/4/09 A. Duda & Sons, Inc. / Juice business Other Beverages Peace River Citrus Products, Inc. Consolidation NA

11/2/09 Cohutta Water, Inc. Other Beverages Crystal Springs Water Co. Consolidation NA

10/31/09 Sapphire Wines LLC Alcoholic Beverages Saint James Company Consolidation 12.0

10/31/09 Sweet Indulgence BakeryBaked Goods / Snack Foods

Management group Private equity NA

10/26/09 The Tanglefoot Company Other Agriculture Contech Enterprises, Inc. Consolidation NA

10/26/09 Rocky Roaster, LLC Other Beverages The Supreme Bean, Inc. Consolidation NA

10/19/09 Leo's Foods, Inc.Baked Goods / Snack Foods

Flowers Foods, Inc. Product line diversification NA

10/19/09 Cape Cod Aquaculture Corp. Protein Management group Private equity NA

10/18/09Andrew Peller Ltd. (Granville Island Brewing Company Ltd.)

Alcoholic BeveragesCreemore Springs Brewery Limited

Consolidation NA

10/15/09 Meridian LLC Other Beverages The Hain Celestial Group, Inc. Consolidation NA

10/14/09 Shot Spirits Corporation Alcoholic Beverages Green Bridge Industries, Inc. Product line diversification NA

10/8/09 Monterey Gourmet Foods, Inc. Processed FoodsPulmuone Holdings Co., Ltd. (Pulmuone U.S.A., Inc.)

Product line diversification 42.0

10/5/09CHAMP Private Equity and Castle Harlan, Inc. (United Malt Holdings, LP)

Alcoholic Beverages GrainCorp. Ltd. Consolidation 662.6

10/5/09 Superior Quality Foods, Inc. Protein Southeastern Mills, Inc. Product line diversification NA

Source: Capital IQ


Volatile commodity markets persisted throughout 2009 as manufacturers balanced increased ingredient costs, reduced sales volumes, and product pricing. Corn, wheat, and soybeans experienced tremendous volatility dur-ing the fourth quarter following a cold and rainy fall. As a result, a larger proportion of crops remain in the field and will not be harvested until the spring.

Corn, Wheat, and SoybeansCorn hit a quarterly high of $3.81/bushel during the fourth quarter 2009, 23% higher than the low of $3.09/bushel during the period. The USDA forecasts the national average corn price in 2010 between $3.25 and $3.85/bushel. The USDA also indicated that U.S. corn production will increase by 6.8% in 2010 to 12.9 billion bushels. Corn and soybean prices remain supported by growing ethanol consumption. As oil and gasoline prices continue to rise, ethanol be-comes more attractive as an alternative fuel source, resulting in increased demand for corn and soybeans.

Soybean prices ranged from $8.78 – $10.37/bushel during the fourth quarter of 2009. The USDA forecasts the na-tional average soybean price in 2010 of $8.20 to $10.20/bushel. Additionally, the USDA is forecasting U.S. production to increase by 12%, to 3.3 billion bushels in 2010.

Wheat hit a quarterly high of $5.17/bushel during the fourth quarter 2009 after beginning the period at a low of $3.98/bushel. For 2010, the USDA has projected an 11.0% decline in U.S. wheat production and is expecting a season average farm price of $4.65 to $5.05/ bushel. Australia, the world’s fourth largest exporter of wheat, has experienced unusually dry weather conditions that will likely affect crop yields this year.

Commodity Review$/

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el

Jan-06 Aug-06 Mar-07 Oct-07 May-08 Dec-08 Jul-09 Mar-10

$9.22

$4.34$3.42

Corn Wheat Soy

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Source: Bloomberg


Commodity Review

Orange JuiceOrange juice futures prices began 2009 at an average price of $0.76/pound in January and finished the year at $1.32/pound in December. Prices further increased in January 2010 following unseasonably cold weather in Florida, the world’s second largest producer other than Brazil. Freezing temperatures reduced an orange harvest already predicted to be the lowest in the past three years due to inclement historical weather which depleted crops.

Natural GasNatural gas prices ranged from $2.32 to $6.01 during the fourth quarter of 2009. Prices fluctuated significantly throughout 2009, but finished the year only slightly higher from an average of $5.23 in January 2009 to $5.34 in December 2009. Prices increased during December 2009 following colder-than-expected weather conditions that resulted in increased natural gas consumption to heat homes and businesses. The cost of natural gas is not expected to rise substantially during 2010, due to high inventory levels, continued domestic natural gas production, and modest levels of consumption.

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Source: Bloomberg

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Source: Bloomberg


The chart below illustrates the index price performance of Duff & Phelps’ selected agribusiness, food, and beverage indices benchmarked against the S&P 500 index. The food and beverage composites have traded in-line with the broader market but continue to maintain above average returns due to the recession resistant nature of the industries. The agribusiness index has experienced a steep decline in performance since June 2008 but has preserved a return of 60.9% since January 2007 as the price of commodities rebounded during 2009 and in the early part of 2010.

Selected Duff & Phelps’ Agribusiness, Food, and Beverage Indices vs. S&P 500 Index, January 2007 – March 2010

Stock Price Performance and Public Market VariationsIn

dex

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of J

anua

ry 2

007

Jan-07 Sep-07 Jan-08 Oct-08 Feb-09 Jun-09 Oct-09 Mar-10

60.9%

12.7%9.9%

-19.2%

May-07 May-08

Agribusiness Food Beverage S&P 500

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Enterprise value to EBITDA multiples for the D&P Beverage Composite have historically traded above the broader D&P Food Composite. The Beverage Composite EBITDA multiples hit a low of 8.4x during Q4 2008 but have since increased to 10.6x during Q4 2009. The D&P Food Composite hit a low of 7.9x during Q4 2008 but experienced a rebound in its multiple hitting 9.1x during Q4 2009.

D&P Food Composite and Beverage Composite Multiples, Quarterly EV/EBITDA Multiples from Q1 2007 – Q4 2009

7.0x

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Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09

EV/ E

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A M

ultip

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D&P Food Composite D&P Beverage Composite Historical Average

Historical EV/EBITDA Multiple Average 9.4x

10.6x

9.1x

The D&P Food Composite is comprised of the Agribusiness and Food companies listed in the Comparable Analysis chart on the following pages. The D&P Beverage Composite is comprised of the Beverage companies listed in the chart.



COMPANY NAME

RECENT STOCK

PRICE(1)% OF 52W

HIGH

MARKET CAP(2)(MM)

ENTERPRISE VALUE (3)

(MM)

MULTIPLES OPERATING STATISTICS

ENTERPRISE VALUE/ TOTAL DEBT/ TTM REVENUE TTM MARGINSREVENUE EBITDA (4) EBITDA GROWTH (5) GROSS EBITDA

FertilizerAgrium Inc. $68.16 95.4% $10,720.9 $11,504.7 1.26x 12.2x 1.9x -9.0% 21.3% 10.3%

CF Industries Holdings, Inc. $104.74 95.2% $5,088.1 $4,226.7 1.62x 5.0x 0.0x -33.5% 32.2% NM

Mosaic Co. $61.60 90.2% $27,422.0 $26,207.0 NM NM 1.4x -52.6% 15.1% NM

Potash Corp. of Saskatchewan, Inc. $116.81 92.4% $34,587.3 $38,250.0 NM NM 3.5x -59.3% 28.1% 31.4%

Terra Industries Inc. $45.44 97.3% $4,548.8 $4,744.8 3.00x 12.0x 1.5x -45.3% 24.4% 25.0%

Median 95.2% $10,720.9 $11,504.7 1.62x 12.0x 1.5x -45.3% 24.4% 25.0%

Mean 94.1% $16,473.4 $16,986.6 1.96x 9.8x 1.7x -39.9% 24.2% 22.2%

SeedMonsanto Co. $72.50 77.7% $39,561.4 $41,152.4 3.82x 11.9x 0.6x -10.0% 55.7% 32.1%

Nufarm Ltd. $8.19 62.4% $1,787.5 $2,639.8 1.09x 13.7x 4.8x 7.4% 21.4% 8.0%

Syngenta AG $282.00 99.7% $26,221.2 $28,148.8 2.56x 12.2x 1.5x -5.4% 49.0% 21.0%

Median 77.7% $26,221.2 $28,148.8 2.56x 12.2x 1.5x -5.4% 49.0% 21.0%

Mean 79.9% $22,523.4 $23,980.3 2.49x 12.6x 2.3x -2.7% 42.0% 20.4%

Other AgribusinessThe Andersons, Inc. $33.50 89.2% $613.1 $775.1 0.26x NM NM -13.3% 8.4% 3.0%

Archer-Daniels-Midland Co. $30.62 92.8% $19,676.1 $25,937.1 0.42x 10.6x 3.2x -20.6% 4.9% 3.9%

Bunge Ltd. $63.27 85.5% $9,101.6 $13,219.6 0.32x NM NM -20.3% 2.9% 0.8%

Corn Products International Inc. $34.77 99.5% $2,611.1 $3,003.1 0.82x 7.4x 1.3x -6.9% 14.2% 11.1%

Nutreco Holding NV $60.03 97.4% $2,100.7 $2,418.6 0.39x 7.7x 2.0x -8.7% 20.9% 5.1%

Penford Corp. $11.22 92.3% $127.6 $197.4 0.75x NM NM 28.8% 6.7% NM

Viterra, Inc. $9.83 85.6% $3,652.0 $4,198.6 0.65x 13.3x 4.9x -2.1% 12.8% 4.9%

Median 92.3% $2,611.1 $3,003.1 0.42x 9.1x 2.6x -8.7% 8.4% 4.4%

Mean 91.8% $5,411.7 $7,107.1 0.51x 9.7x 2.9x -6.2% 10.1% 4.8%

AGRIBUSINESS

Protein

High Liner Foods Inc. $10.22 99.2% $176.2 $253.9 0.42x 5.9x 1.8x 1.8% 16.3% 7.1%

Industrias Bachoco S.A.B. de C.V. $19.86 81.4% $993.0 $879.0 0.48x 5.4x 0.5x 15.6% 16.9% 8.9%

JBS S.A. $5.34 86.0% $7,466.7 $9,625.5 0.47x 12.9x 4.4x 33.5% 8.8% 3.6%

Maple Leaf Foods Inc. $10.41 88.7% $1,424.0 $2,491.2 0.49x 7.4x 3.0x -0.4% 14.1% 6.6%

Sanderson Farms Inc. $50.13 94.9% $1,021.5 $1,124.8 0.62x 5.3x 0.5x 4.0% 13.0% 11.7%

Seaboard Corp. $1,392.00 88.9% $1,720.5 $1,433.4 0.38x 10.1x 1.1x -6.9% 6.2% 3.7%

Smithfield Foods Inc. $19.09 96.1% $3,165.8 $5,776.6 0.50x NM NM -5.5% 4.5% 0.7%

Tyson Foods Inc. $17.24 98.0% $6,492.5 $8,640.5 0.32x 6.3x 2.5x -0.3% 6.4% 5.1%

Median 91.9% $1,572.3 $1,962.3 0.47x 6.3x 1.8x 0.7% 10.9% 5.9%

Mean 91.7% $2,807.5 $3,778.1 0.46x 7.6x 2.0x 5.2% 10.8% 5.9%

FOOD

(1) As of 3-7-10(2) Market Capitalization is the aggregate of a firm’s outstanding common stock.(3) Enterprise value is the total value of a firm (including all debt and equity).(4) Earnings before interest, taxes, depreciation and amortization(5) Trailing Twelve MonthsSource: Capital IQ.



COMPANY NAME

RECENT STOCK

PRICE(1)% OF 52W

HIGH

MARKET CAP(2)(MM)


(MM)



DairyDairy Crest Group plc $5.52 85.5% $735.5 $1,346.6 0.54x 6.1x 2.9x 1.6% 28.7% 8.9%

Dean Foods Co. $16.00 72.4% $2,900.8 $7,097.4 0.64x 10.3x 6.1x -10.4% 27.9% 6.2%

Danone $60.19 99.9% $36,875.6 $46,440.4 2.28x 11.2x 0.0x -1.6% 100.0% 20.3%

Glanbia plc $3.68 90.6% $1,077.5 $1,833.3 0.65x 8.3x 3.9x -8.9% 16.2% 7.8%

Saputo, Inc. $29.29 96.8% $6,069.3 $6,540.2 1.14x 10.2x 0.8x 5.1% 11.2% 11.2%

Median 90.6% $2,900.8 $6,540.2 0.65x 10.2x 2.9x -1.6% 27.9% 8.9%

Mean 89.0% $9,531.8 $12,651.6 1.05x 9.2x 2.7x -2.8% 36.8% 10.9%

Diversified FoodsAssociated British Foods plc $14.54 98.3% $11,456.3 $13,461.6 0.96x 9.0x 1.4x 12.4% 23.4% 10.7%

Campbell Soup Co. $34.39 96.1% $11,793.2 $14,330.2 1.89x 8.5x 1.6x -5.0% 41.2% 22.3%

ConAgra Foods, Inc. $25.29 100.0% $11,213.7 $14,234.4 1.13x 8.5x 2.1x 2.1% 25.0% 13.3%

Del Monte Foods Co. $13.96 99.8% $2,768.3 $4,357.5 1.16x 6.9x 2.5x 11.9% 31.3% 16.9%

Dole Food Company Inc. $12.03 93.5% $1,051.7 $3,265.0 0.47x 7.9x 5.5x -8.9% 11.2% 6.0%

Fresh Del Monte Produce Inc. $20.16 81.4% $1,282.2 $1,580.5 0.46x 6.3x 1.2x -2.6% 9.5% 7.3%

General Mills Inc. $72.69 99.2% $23,954.0 $30,040.1 2.03x 9.0x 2.0x 2.7% 40.8% 22.5%

The Hain Celestial Group, Inc. $16.97 85.3% $692.9 $901.2 0.89x 11.4x 3.0x -11.7% 25.8% 7.9%

Hershey Co. $41.45 98.1% $6,931.0 $8,259.3 1.56x 7.9x 1.5x 3.2% 38.9% 19.6%

HJ Heinz Co. $46.40 99.9% $14,673.4 $18,994.3 1.82x 10.3x 2.6x 2.3% 35.8% 17.7%

Hormel Foods Corp. $41.84 98.0% $5,591.8 $5,492.7 0.84x 7.8x 0.5x -3.7% 17.4% 10.7%

The J. M. Smucker Company $59.66 94.7% $7,101.1 $7,885.6 1.71x 7.7x 0.9x NA 38.1% 22.3%

Kellogg Co. $52.93 95.5% $20,143.3 $24,692.3 1.96x 9.8x 1.9x -1.9% 43.7% 20.1%

Kraft Foods Inc. $29.34 97.5% $43,404.8 $60,236.8 1.49x 9.3x 2.9x -3.7% 36.2% 16.1%

McCormick & Co. Inc. $38.00 100.0% $5,017.5 $5,952.1 1.86x 10.3x 1.7x 0.5% 41.7% 18.1%

Nestlé S.A. $49.25 97.1% $178,070.6 $198,973.7 2.12x 13.3x 1.5x -2.4% 56.8% 16.0%

Ralcorp Holdings Inc. $68.23 99.3% $3,735.3 $5,014.3 1.28x 8.0x 2.5x 24.6% 27.7% 16.0%

Sara Lee Corp. $13.95 99.4% $9,221.0 $10,729.0 0.85x 6.1x 1.6x 2.2% 38.8% 13.9%

Tootsie Roll Industries Inc. $28.17 100.0% $1,653.1 $1,611.1 3.19x NA 0.1x 1.7% 35.2% 18.8%

Treehouse Foods Inc. $44.52 98.9% $1,529.3 $1,927.4 1.28x 11.3x 2.4x 0.7% 21.5% 11.3%

Unilever plc $30.25 98.6% $85,325.6 $94,500.7 1.74x 10.2x 1.5x -1.7% 100.0% 17.0%

Median 98.3% $7,101.1 $8,259.3 1.49x 8.7x 1.7x 0.6% 35.8% 16.1%

Mean 96.7% $21,267.1 $25,068.6 1.46x 9.0x 1.9x 1.1% 35.2% 15.5%

Baked Goods/Snack FoodsARYZTA AG $37.80 70.0% $2,984.1 $3,946.9 0.90x 8.5x 2.8x 20.7% 27.0% 10.6%

Diamond Foods, Inc. $40.18 99.8% $668.2 $772.9 1.39x 12.1x 1.7x 2.5% 25.2% 11.5%

Flowers Foods, Inc. $25.72 96.4% $2,359.0 $2,591.7 1.00x 9.1x 0.9x 7.7% 46.5% 10.9%

George Weston Limited $66.07 92.0% $8,528.0 $12,142.8 0.39x 7.2x 3.5x -0.8% 24.6% 5.4%

Grupo Bimbo SA de CV $7.87 97.7% $9,255.4 $11,824.6 1.29x 9.5x 2.3x 41.5% 52.8% 13.6%

J&J Snack Foods Corp. $42.49 94.9% $781.5 $693.2 1.05x 7.0x 0.0x 3.3% 32.4% 15.0%

Lance, Inc. $21.57 76.3% $691.2 $802.3 0.87x 8.5x 1.2x 7.7% 40.3% 10.3%

Tasty Baking Co. $7.05 89.2% $60.4 $156.9 0.87x 15.5x NA 6.5% 34.1% 5.6%

Median 93.5% $1,570.2 $1,697.0 0.95x 8.8x 1.7x 7.1% 33.3% 10.8%

Mean 89.6% $3,166.0 $4,116.4 0.97x 9.7x 1.8x 11.1% 35.4% 10.4%

FOOD, cont’d




COMPANY NAME

RECENT STOCK

PRICE(1)% OF 52W

HIGH

MARKET CAP(2)(MM)


(MM)



AlcoholicAnheuser-Busch InBev $49.51 95.5% $78,762.4 $130,707.7 3.81x 11.4x 5.2x 59.4% 52.8% 33.5%

Brown-Forman Corporation $55.51 99.9% $8,306.5 $8,980.4 3.74x 11.7x 1.3x -8.8% 64.7% 32.0%

Constellation Brands Inc. $15.81 90.0% $3,509.4 $7,581.3 2.24x 11.6x 6.3x -10.8% 34.2% 19.3%

Diageo plc $16.39 99.4% $40,666.2 $52,969.1 3.70x 12.4x 3.2x 6.5% 57.8% 29.9%

Fortune Brands Inc. $46.42 99.3% $7,054.8 $11,120.7 1.79x 11.3x 4.5x -12.7% 43.3% 15.9%

Molson Coors Brewing Company $42.81 83.4% $7,952.0 $8,937.7 2.95x 15.1x 2.9x -36.5% 43.1% 19.5%

Median 97.4% $8,129.2 $10,050.5 3.32x 11.6x 3.9x -9.8% 48.0% 24.7%

Mean 94.6% $24,375.2 $36,716.1 3.04x 12.2x 3.9x -0.5% 49.3% 25.0%

Other BeverageThe Coca-Cola Company $54.70 92.0% $126,090.3 $129,283.3 4.17x 13.2x 1.2x -3.0% 64.2% 31.6%

Cott Corporation $6.98 71.7% $567.3 $828.7 0.52x 4.8x 1.6x -3.1% 15.6% 10.8%

Hansen Natural Corporation $41.41 94.1% $3,650.7 $3,304.1 2.89x 9.6x 0.0x 10.6% 53.6% 30.0%

National Beverage Corp. $11.65 80.3% $537.1 $426.9 0.72x 7.5x 0.0x 3.9% 30.9% 9.7%

Pepsico, Inc. $64.37 99.8% $101,054.5 $105,317.5 2.44x 11.0x 0.8x 0.0% 53.5% 22.2%

Median 92.0% $3,650.7 $3,304.1 2.44x 9.6x 0.8x 0.0% 53.5% 22.2%

Mean 87.6% $46,380.0 $47,832.1 2.15x 9.2x 0.7x 1.7% 43.6% 20.8%

BEVERAGE



> SOLVENCY OPINION

Pacific Coast Producers Case StudyDuff & Phelps was engaged by Pacific Coast Producers (the “Company”) to act as an independent financial advisor to the Board of Director of the Company and provide advisory services for corporate planning purposes.

The Company is a northern California based grower-owned agricultural cooperative with over 160 member growers located throughout California. Founded in 1971, the Company is a leading processor and marketer of canned peaches, pears, apricots and fruit cocktail mix as well as a leading supplier of canned tomato products. The Company’s products are primarily marketed under store brands through the retail and foodservice channels.

Duff & Phelps Experience

Served as an independent financial advisor and rendered a fairness

opinion to the Board of Directors of Del Monte Foods Company

D&P Subsidiary Chanin Capital Partners rendered a fairness opinion to its

creditors on the restructuring

Representative Food and Agribusiness Transaction Experience

> SELL SIDE ADVISOR

has completed the spin-off of

Kraft

Served as a financial advisor to Altria Group Inc. with respect to

the transaction

has been acquired by

Foster Farms Dairy

Initiated the transaction, assisted in the negotiations, and served as financial advisor to Humboldt Creamery, LLC

has completed the sale of its private label soup, infant feeding and food

service group businesses to

TreeHouse

> FINANCIAL ADVISOR > SELL SIDE ADVISOR

> SELL SIDE ADVISOR> FAIRNESS OPINION

Served as independent financial advisor to the Board of Directors

of Pacific Coast Producers

Acted as financial advisor to the Shareholders Council of the Fonterra

Co-Operative Group Limited

> FINANCIAL ADVISOR

has been acquired by

Bolthouse Farms

Acted as exclusive financial advisor to Mercer Ranches, Inc. and initiated

structured and negotiated this transaction

> FAIRNESS OPINION

> FINANCIAL ADVISOR

has been acquired byOlam International Limited

Served as exclusive financial advisor to the Chapter 11 Trustee of

SK Foods, LP

a portfolio companyVestar Capital Partners

has completed a recapitalization transaction.

Acted as financial advisor to the Board of Directors of Birds Eye Foods, Inc.

and issued a solvency opinion on the transaction

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Duff Phelps Food and Agribusiness Q4 2010 FINAL