Topic: Valuation and Mergers & acquisitions

I need powerpoint presentation with 20 slides and each slideshave to be speakers note minimum 200 words. could you please follow below quistions that I attached please and very important thing is speakers note that includes own ideas and thoughts

CHINA's BRIGHT FOOD CASE CTU FINC600. Professor: R. Biasca. FIRST PART (Due: Week 7; 2/16/17) In this presentation, you should use the concepts learned in units 1 to 5. Look for information about the company in Internet Read the case. Indicate in your presentation: - Description of the company - Organization Structure. - Products - Strategy, before and after 2010. - Financial Statement Analysis. All the mergers and acquisitions should be analyze in the second part. PPT presentation: 8-10 slides are expected. TEAMS: two. Page 1 of 2 FINAL PRESENTATION (Due Week 10; 3/9/17) In the final presentation, the concepts learned about business valuations and mergers and acquisitions should be used (Units 6 to 10). PPT presentation: 30-40 slides with speakers' notes are expected. TEAMS: all the students will work in one team. The slides should cover the topics mentioned in the third part. Page 2 of 2 Part 1: Review of BF's valuations for MM targets - See Powerpoint presentation. Part 2: Small group discussions on: a} The contexts of successtuitunsucoesstul initiatives; and h] The impact of contexts on man outcomes. Part 3: lEilass Discussion: a] Review of the different contexts In which the acquisition exercise was conducted including: i. The reasons for Bright Food's intention to acquire the company and why the acquires company had put the company for sale; ii. The organisational context and the extemal environment in which the negotiations took place: and iii. The valuations expected and accepted given the various contexts. In) Learning from the failed attempts - Sucrcgen and Yoplait as well as United Biscuits c] Learning from the successful attempts Synlait Milk and lvlanassen foods d} Concluding with brief on Bright Food's overseas acquisition strategy after 2012. For the exclusive use of L. Hampton, 2017. CHINA'S BRIGHT FOOD OVERSEAS M&A STRATEGY 2010-2012 - A STEEP LEARNING CURVE HBSP No. NTU080 Ref No.: ABCC-2016-002 Date: 17 February 2016 Gillian Yeo and Wee Beng Geok During the 2000 decade, China's state-owned enterprises (SOEs) were subjected to several organisational reforms by the Chinese government. One of the outcomes of these reforms was the consolidation of a cluster of companies in the domestic food industry under a holding company, Bright Food (Group) Co., Ltd, a 100% government-owned enterprise. Headquartered in Shanghai, the Group had 19 subsidiaries of which four were listed in the Shanghai Stock Exchange. In executing the government's strategy of encouraging SOEs to expand overseas, in 2010 the Group embarked on a series of acquisition overseas to strengthen its domestic competitive position and increase its global footprint. This case examines the contexts and outcomes of the Group's eight overseas M&A initiatives in the food industry in Australia, Europe, New Zealand and the United States from 2010 to 2012. The case provides an opportunity to examine a Chinese SOE's overseas M&A strategy, including reasons for M&A targets and challenges in its first steps in global M&A dealmaking. Professor Gillian Yeo and Dr Wee Beng Geok prepared this case with research assistance from Wilfred Chua, Chen Xizi, Xia Xiao Xing and Priya Subramanian. It is based on public sources. As the case is not intended to illustrate either effective or ineffective practices or policies, the information presented reflects the authors' interpretation of events and serves merely to provide opportunities for classroom discussions. COPYRIGHT 2016 Nanyang Technological University, Singapore. All rights reserved. No part of this publication may be copied, stored, transmitted, altered, reproduced or distributed in any form or medium whatsoever without the written consent of both parties. The Asian Business Case Centre, Nanyang Business School, Nanyang Technological University, Nanyang Avenue, Singapore 639798. Phone: +65-6790-4864/6552, E-mail: asiacasecentre@ntu.edu.sg This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 2 ABCC-2016-002 INTRODUCTION In the 2000s, tasked by the Chinese government to expand abroad, many Chinese state-owned Enterprises (SOEs) were launching bids for overseas firms and assets. (See Appendix 1 - Structure and Governance of Chinese SOEs.) As one of China's larger SOEs in the domestic food industry, Bright Food (Group) Co., Ltd (Bright Food) embarked on a series of merger and acquisition (M&A) initiatives targeting a range of overseas foodrelated companies in 2010. Bright Food's series of overseas M&A initiatives across the developed countries produced mixed results. Having overcome a steep learning curve, the Bright Food Group, at the beginning of 2013, was determined to forge ahead with further global acquisitions to increase its overseas footprint while strengthening its competitive position in China's large food industry. This is only the start of Bright Food's globalisation. Our company will definitely conduct more 1 deals focusing on our main businesses, such as dairy, sugar and wine. Ge Junjie Vice-President, Bright Food Group The longer-term challenge was to ensure that the cross-border acquisitions would accelerate the growth of the Group's market share both at home and abroad, and enhance asset and revenue growth. Corporate Structure In August 2006, the Chinese government consolidated several SOEs and associated companies in the 2 food industry to create one of China's largest food conglomerates with estimated assets of RMB $45.8 billion and estimated annual sales revenue of RMB $45.0 billion. The holding company, Bright Food, incorporated as a private limited company with headquarters in Shanghai, had 19 subsidiaries, including four publicly listed companies. As a SOE, Bright Food was jointly managed by the Shanghai local administration and China's Central Government's State-owned Assets Supervision and Administration Commission. The consolidations were initiated as part of a nationwide policy to restructure state-owned companies to increase their international competitiveness. While smaller factories incurring losses were closed, the larger ones were merged into massive industrial conglomerates. \"The core business of the new Bright Food Group is to be centred around the whole food industry chain, to encompass modern agriculture, food processing, circulation and distribution,\" Wang Zongnan, head of 3 the Group, said at the inauguration ceremony. Its articulated mission was \"To build the company into a leading enterprise group in the national food industry, with famous brands, advanced technology, strong 4 competitive power and deep influence in the world by the end of 2015.\" As consumer preferences changed, Bright Food Group was placing heavy emphasis on the promotion of the quality, health and safety benefits of its brands in China's domestic market. Acquisitions of food-related companies in developed countries were seen as contributing to this goal. 1 2 3 4 Shen, J. (2012, March 8). Food companies show appetite for growth through overseas M&A. China Daily. Marketline. (2006, July 25). Shanghai Bright Dairy Group, the holding company for Bright Dairy, merged with Shanghai Sugar Tobacco Wine Co., Shanghai Agriculture Industry and Commerce Group and Jinjiang Food. Shanghai government's intention was to create China's largest food and drink business. Li, Xiaowei. (2006, August 9). China: Industry unveils new food, drinks conglomerate. China Daily. Bright Food (Group) Co., Ltd. Enterprise Culture: Mission. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 3 ABCC-2016-002 Core Businesses Bright Food was engaged in China's entire food supply chain from agriculture, food processing and 5 production, to food distribution and retail, with about 3,300 retail outlets in China. In 2011, the Group's total assets grew to RMB 82 billion and revenue from its primary business was RMB 6 75 billion. The Group's major business activities included: Sugar - The Group was China's leading supplier of sugar, with a market share of about 15%. 7 Dairy - Bright Food's dairy business ranked third in China with sales of US$1,862.6 million in 2011, behind Mengniu Dairy Industry and Inner Mongolia Yili Industrial Group Company with sales of US$5,907.6 million and US$5,887.9 million in 2011 respectively. (See Exhibit 1.) Wine-making - The yellow wine-making business ranked top in its industry in China. Food Brand Operations - Ranked top in its industry in China. (See Exhibit 2.) Chain Store Operations - Occupied front rank in its industry in China. Modern agriculture - Occupied front rank in its industry in China. Other businesses included a taxi company, real estate and tourism, biomedical products, agricultural machinery and children's apparel. Key Products In 2011, the Group's key products included many nationally renowned brands such as: 8 Bright Infant Milk Formula- The main product of Bright Dairy & Food Co., Ltd (Bright Dairy). It had been awarded the 'Famous Chinese Trademark' and 'Famous Chinese Brand Product'. Guanshengyuan - This brand was established in 1918 and was awarded the Famous Chinese Trademark. It was also one of the top 100 time-honoured brands of traditional Chinese industry. The main products include candy, honey, wine, pasta, monosodium glutamate, frozen food, health food among others. Big White Rabbit - Dabaitu (Big White Rabbit) brand candy was the main product of Guanshengyuan (Group) Co., Ltd. and had won the honours of Famous Chinese Trademark, Famous Chinese Brand product and Famous Shanghai Brand. Maling - Maling canned food was one of the well-known traditional Chinese food brands and it had won the 'Famous Chinese Brand' award. 5 6 7 8 Bright Food Group Co. Ltd, Company Overview. (2013, March 13). Bloomberg Businessweek. ibid. Mitsui & Co. Ltd. (2010, September). Business Partnership with Bright Food Group - One of China's Biggest Food Conglomerates. Retrieved November 17, 2014, from https://www.mitsui.com/jp/en/release/2010/1205224_6469.html Bright Food Group website. Brand Center-Famous Chinese Trademark-Famous Chinese Brand Product. Retrieved November 17, 2014, from http://english.people.com.cn/102775/203908/203913/index.html This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 4 ABCC-2016-002 Shikumen- Shikumen was the main brand of Shanghai JinFeng Wine Co., a Chinese rice wine. Hejiu - Hejiu, a popular Chinese rice wine, was a major brand of HuaGang Brewery Co., Ltd. The Group had four subsidiaries listed on the Shanghai Stock Exchange (see Figure 1). BRIGHT FOOD'S GLOBALISATION STRATEGY SOEs began their internationalisation thrust after the 'going-global strategy' (zouchuqu) was proposed at th the fifth plenary session of the 15 Central Committee of the Communist Party of China in 2000. The 'going-global strategy' reiterated the Chinese government's support for the globalisation of Chinese domestic enterprises. At a political level, it meant that government economic policy took into account international issues such as regional free trade agreements and natural resource development projects abroad. Major goals of the 'going global' policy included: i. ii. iii. iv. Expanding international global market Exploiting natural resources overseas Acquiring new technologies Enhancing the Group's corporate value. However, for China's food and beverage industry, the attempt to go global only gained momentum in the late 2000s. Although there were a total of 221 M&A deals in the Chinese food industry from July 2008 to 9 June 2011 , only eight cases (4%) involved overseas targets. In this period, China's M&A transactions in the food and beverage sector totalled US$9.33 billion, with outbound M&As accounting for merely 1% of the total transaction value. Figure 1 Product Details of the Listed Companies (2011) Bright Food (Group) Co., Ltd Bright Dairy & Food Co., Ltd (Listed 2002) Milk production, dairy products and health food; distribution and logistics. 9 Shanghai Jingfeng Wine Co., Ltd. (Listed 1992) Food retailing, processing and brand agencies. Production and distribution of rice wine products. Shanghai Haibo Co., Ltd (Listed 1996) Transport services: taxi and modern logistics with the integration of transportation, packaging, storage, refrigeration, processing, distribution, international freight forwarding and other logistics services. Shanghai Maling Aquarius Co., Ltd (Listed 1997) Manufacturing and sales of canned food products, drinking water and beverages, frozen food and other commodities,: imports and exports of various commercial goods. Its major brands include 'Maling', 'Meilin', 'Zhengguanghe' 'Aquarius', and 'Guangming'. According to a research note from ChinaVenture, an investment consultancy company in China. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 5 ABCC-2016-002 For Chinese companies, when they make M&As abroad, they mainly focus on upstream 10 resources and their major purpose is to lift market share in the Chinese market. Fiona Wan China Venture Analyst Among China's SOEs in the food industry, Bright Food took the lead in launching major overseas M&A initiatives. By setting a target of doubling revenue from US$ 7 billion in 2010 to US$14 billion by 2015, Bright Food's aim was for these M&A deals to help raise the proportion of their overseas revenue from five percent in 2010 to 30 percent by 2015. With this ambitious revenue target, Bright Food organised a powerful financial consulting team that included Rothschild Investment bank in Greater China, working together with Rothschild's headquarters in the United Kingdom, to facilitate the M&A process. We are trying to take a shortcut by taking advantage of foreign brands and resources to move into the overseas market. It should be faster and more effective than going abroad with our own 11 products. Wang Zongnan Chairman, Bright Food Group Furthermore, Pan Jianjun, spokesman for Bright Food, said that the company planned to exploit its mainland strength to introduce global brands. \"China is a huge market and Bright Food has a broad sales network in China. We hope to leverage that advantage to introduce international brands to Chinese 12 consumers at a fast pace.\" Bright Food has a clear strategy of buying into overseas food companies as a direct response to food safety issues in China. Nielsen research shows consumers in China are definitely attracted to imported products and are also prepared to pay a premium for the perceived higher standard 13 of quality and safety. Dale Preston Nielsen, Shanghai Over the past decade, China had struggled with food safety issues. In the spring of 2012, a survey carried out in 16 major Chinese cities asked urban residents to list \"the most worrisome safety concerns.\" Food safety topped the list (81.8%), followed by public security (49%), medical care safety (36.4%), 14 transportation safety (34.3%), and environmental safety (20.1%). In 2008, milk and infant formula were tainted with the chemical melamine, an industrial chemical used to 15 make fertilizer and plastic pipe. It made at least 300,000 people ill, and killed at least six infants. The melamine scandal was blamed, in part, on dairy processors' practice of buying milk from small, 16 independent dairy farmers. This caused a nationwide panic among parents of young children, and there was a worldwide recall of Chinese products ranging from biscuits to baby formula. In 2012, it was found out that alkaline water used to clean equipment was mixed into Bright Dairy's Ubest milk during equipment maintenance. When this came to light, about 300 cartons of 950-millilitre Ubest 10 11 12 13 14 15 16 Food Companies show appetite for growth through overseas M&A. (2012, August). China Daily. Bright Food hopes Yoplait cannot resist China. (2011, March). AFP. Waldmeir, P. (2012, June). Bright Food on global buying spree. Financial Times. ibid. Huang, Y. (2012, August 27). China's Food Safety Crisis: how serious is the Problem? Council on Foreign Relations. Magistad, M. K. (2012, November 13). Food Safety and Eating in China. The World. Hornby, L. & Lin, D. (2013, March 7). China's Bright Food looking to acquire overseas sugar firm. Reuters. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 6 ABCC-2016-002 milk available on the market were sent back for inspection. consumers: 17 Bright Dairy also issued a public apology to Our heart was heavy, food safety is the top priority of our livelihood, and the company bears the obligation of social responsibility. Bright Dairy & Foods Co., Ltd wishes to express its deepest 18 apologies to the vast number of consumers. The statement also outlined a number of corrective measures that the firm had implemented since the scandal and confirmed that it had established a quality and safety supervision group. Bright Dairy was not the only dairy SOE involved in product recall. A few weeks earlier, China's leading dairy producer Inner Mongolia Yili Industrial Group also recalled infant milk formula due to mercury 19 contamination. Bright Food's globalisation initiatives had support from the Shanghai provincial government, one of its major stakeholders. In the wake of the various food contamination problems, the acquisition of foodrelated companies in developed countries was regarded as a measure towards improved food quality as well as productivity. Furthermore, as China's living standards rose with rising GDP (RMB 5.9 trillion in 2010), the demand for global quality food products, especially branded products was set to grow. Thus, acquiring major global brands would enable the Bright Food Group to improve its competitive position in the Chinese market of 1.3 billion people. Summary of Bright Food's M&A Initiatives (2010-2012) With these considerations in mind, between July 2010 and May 2012, Bright Food launched more than seven M&A initiatives in the food industry, of which only four deals were successful. Two of the deals were undertaken by the its subsidiaries, Bright Dairy and Food Co., Ltd and Shanghai Tangjiu Group, while the rest were all undertaken by Bright Food (Group) Co., Ltd. The initiatives resulted in four successes (New Zealand's Synlait Milk, Australia's Manassen Foods, UK's Weetabix and France's Diva Bordeaux Wine Company and two failures (Australia's Sucrogen and France's Yoplait). Other initiatives did not go beyond the negotiation stage: Bright Food entered into talks to buy Britain's 20 United Biscuits for more than 2 billion (US$3.13 billion), as well as US-based retailer of food 21 supplements GNC Holdings for about US$2.5 billion. However, no official bids were made for either company (see Figure 2). The Sucrogen Deal 22 Sucrogen Limited (Sucrogen) was the largest producer of raw and refined sugar in Australia and New 23 Zealand , and the eighth largest global producer. Sucrogen, the second largest global producer of sugarbased ethanol using a waste by-product of cane sugar production, was also Australia's largest renewable energy generator. 17 18 19 20 21 22 23 Chen, D. (2012, June 29). Bright Dairy recalls tainted milk. Global Times. Astley, M. (2012, October). Bright Dairy issues apology over 2012 food safety scandals. Dairyreporter.com. Burkittt, L. (2012, June). Fears over Safety of Infant Formula Resurface After New Product Recall. The Wall Street Journal. Bright Food in Talks for United Biscuits? (2010, September). New York Times. GNC favors IPO as Bright Food walks away. (2011, January 21). Reuters. It is a non-listed public company, with limited liability. Through its 75% interest in two joint ventures with Sugar Australia and New Zealand Sugar Company. Mackay Sugar owned the other 25%. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 7 ABCC-2016-002 Figure 2 Timeline of Bright Food M&A Initiatives Source: Created by authors. Sucrogen was a fully owned subsidiary of CSR Limited (CSR Ltd), an Australian publicly listed diversified manufacturing company with operations throughout Australia, New Zealand and Asia. In January 2010, CSR Ltd announced an intention to sell its sugar and renewable energy business under Sucrogen to focus on its other businesses such as property, building products and aluminium. (See Exhibit 3 - Overview Of Sucrogen Financials.) Bright Food, a top sugar supplier in China, with a market share of about 15%, quickly made its move and offered to purchase Sucrogen for A$1.5 billion. After further talks with CSR Ltd, Bright Food bid was raised to A$1.75 billion in April 2010. Shortly after the increase in bid, CSR Ltd made a statement: The offer remains subject to a number of conditions including completion of due diligence, regulatory approvals and execution of transaction documentation. Accordingly, there is no 24 certainty that any transaction will be completed with Bright Food. It was further mentioned that CSR Ltd intended to enter into discussions with Bright Food to explore this proposal further. However, on 2 July 2010, Bright Food Ltd announced that it was cutting its non-binding bid down to A$1.65 billion. Shortly after this, in the same month, CSR Ltd announced the sale of Sucrogen, to Wilmar International Limited (Wilmar), a Singapore-based global-agribusiness group, for an enterprise value of 25 A$1.75 billion (US$1.472 billion). The deal was subject to approval from Australia's Foreign Investment 26 Review Board and New Zealand's Overseas Investment Office. When queried on the reason for choosing Wilmar over the Chinese SOE, Jeremy Sutcliffe, CSR Managing Director, said that the offer from Wilmar provided greater value and certainty, and Wilmar's \"extensive cross-border experience\" in M&A \"enabled a very seamless path to the transaction\". 24 25 26 CSR. (2010, April). Bright Food A$1.75 billion conditional offer to acquire Sucrogen. [CSR News Release]. US$1.13 billion in equity and US$339 million of net debt. Holmes, S. (2010, July). Wilmar outbids Bright Food for CSR's sugar unit Sucrogen. The Wall Street Journal. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 8 ABCC-2016-002 Furthermore, he added that \"Bright Food completed their due diligence, but ultimately at the end of the 27 day they could not quite get there on value and certainty.\" In response to the failure to acquire Sucrogen, Chen Chunshan, Bright Food's spokesperson said: The A$1.75 billion is definitely much higher than what a state-owned company like Bright Food 28 can afford, although we would love to buy the sugar unit of CSR. Acquisition of Synlait Milk Synlait Milk, a small player in the dairy export market in New Zealand, was a subsidiary of Synlait Limited, a private limited company incorporated in New Zealand. Synlait Milk's range of products included infant and adult nutritional formulations, functional food ingredients such as UHT (Ultra-High-Temperature) milk and calcium-fortified powders, and specialised products to support a healthy lifestyle. Its milk products were sold in Southeast Asia, Japan, North Africa and the Middle East. In November 2010, Bright Dairy, a subsidiary of Bright Food, successfully acquired 51% stake in Synlait Milk for NZ$82 million (US$58 million), (See Exhibit 4 - Overview Of Bright Dairy Financials And Synlait Milk Financials). The New Zealand dairy firm saw the partnership with Bright Dairy as giving it a foothold in the Chinese dairy market ahead of its competitors. After the acquisition, Synlait Limited would have a 26.5% stake in Synlait Milk, with the remaining 22.5% 29 stake in Synlait Milk retained by Japan's Mitsui and Co. When asked whether the acquisition would be approved by New Zealand's Overseas Investment Office (OIO), Synlait Limited's CEO, Dr John Penno, was confident the deal would easily gain OIO's approval. He said, \"We do not have too many concerns in terms of regulatory approval in New Zealand as this investment is in processing and industrial 30 manufacturing, not in sensitive land.\" After the acquisition, Synlait Milk planned to adopt a global sales strategy with a three-way market focus: one-third of its business in China, one-third in the rest of Asia and one-third in the rest of the world, with 31 exports to about 40 countries. The Synlait Milk deal was Bright Dairy's first investment in processing facilities outside China, and the Company planned to increase exports of New Zealand milk powder and infant formula to China. The New Zealand Company planned to build a new milk processing plant with the cash injection, doubling Synlait's production capacity: In China, the market for premium products from New Zealand and Australia is growing rapidly. Synlait Milk will help Bright Dairy establish a market leading position in the infant formula and 32 milk powder category with a planned co-branded range. Benheng Guo President, Bright Dairy After the acquisition, Dr John Penno remained as Synlait's CEO. However half of the senior management 33 team subsequently left the Company. 27 28 29 30 31 32 33 CSR settles on Wilmar for sugar sale. (2010, July). CIO. Ding, Q. (2010, July 7). Bright Food fails in bid for Sydney-based CSR. China Daily. Mitsui and Co acquired 22.5% stake of acquisition of Synlait Milk in 2007 for US$ 13.5 million. (2010, July). Adams, C. (2010, July 20). Chinese to buy Synlait majority stake. The New Zealand Herald. Bartlett, L. (2012, November). New Zealand Trade and Enterprise Turning milk into money. Idealog. China's Bright Dairy invests in NZ' Synlait. (2010, July 18). Reuters. Wallace, N. (2010, November 13). Future looking bright for Synlait. Otago Daily times. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 9 ABCC-2016-002 United Biscuits, Britain The company, a leading manufacturer and marketer of biscuits was founded in 1948 by the merger of two 34 Scottish family businesses. The major proportion of its sales revenue was from Western Europe where it held the top seller in the British biscuit market, and was in the number two spots in France and 35 Belgium. United Biscuits carried several globally renowned biscuit brands, including Jacob's, Dlichoc, 36 and McVitie's. In 2006, United Biscuits was bought over by two private equity firms, US-based Blackstone Group and France's PAI Partners, for 1.6 billion. The purchase had been financed through a combination of equity 37 contributed equally by Blackstone and PAI, as well as debt financing. Four years later, exclusive talks were held with Bright Food regarding a possible purchase of the British 38 confectionary company. The price expected was reported to be more than 2 billion (US$3.13 billion). Bright Food, as one of China's top food brand, was ranked top in terms of its food brand operations in China. This included the manufacture and distribution of candy, honey and other confectionary products as well as health foods. Although United Biscuits was well-positioned in Western Europe, which generated the bulk of its revenue, it had relatively little exposure to faster-growing emerging markets. The acquisition would enable Bright Food to expand its share of China's biscuit market through a wellestablished range of overseas biscuit brands and products. Furthermore, the acquisition could also be an opportunity for the Chinese food giant to gain insights on the European market for confectionery products. However, after more than a month of negotiations, the two could not agree on the indicative price which would have valued the company at around 10x EBITDA and Bright Food walked away from the 39 negotiations. Had Bright Food closed the deal, it would be the first Chinese company to take full control of a major European food company. France's Yoplait SAS In 2011, Yoplait, the world's second largest yoghurt brand by sales, was put up for sale by PAI, a private equity firm that jointly owned Yoplait with Sodiaal, a French farmers' cooperative. Headquartered in Paris, Sodiaal was the largest dairy cooperative in France with close to 7,000 employees, and 12,600 interdependent producers across 64 departments. With 4.1 billion litres of milk collected annually, Sodiaal was the fifth largest European milk collector, accounting for 22% of France's milk collection and processing. As a cooperative, Sodiaal belonged to dairy producer members. Each member was entitled to one vote and able to participate in the appointment of representatives to manage the company. Members could also take on the role of running the company if they were elected. Sodiaal was run by the Board of 34 35 36 37 38 39 United Biscuits. History. Retrieved on December 30, 2014, from http://www.unitedbiscuits.com/our-business/history/ Quinn, J. (2006, October 25). United Biscuits sold for 1.6bn. The Telegraph. Retrieved on December 30, 2014, from http://www.telegraph.co.uk/finance/2949557/United-Biscuits-sold-for-1.6bn.html United Biscuits. Brands. Retrieved on December 30, 2014, from http://www.unitedbiscuits.com/our-brands/ PAI Partners. (October 2006). The Blackstone Group and PAI Partners acquire United Biscuits. [Press Release]. Retrieved on December 30, 2014, from http://www.paipartners.com/Media-Centre.htmx?itemid=2101109104301 Cauchi, M. (2010, September 26). China's Bright Food Considers Buying U.K.'s United Biscuits. The Wall Street Journal. Retrieved on December 30, 2014, from http://www.wsj.com/articles/SB10001424052748704082104575515720847644274 Food & Drink Business Europe. Retrieved on December 30, 2014, from http://www.fdbusiness.com/tag/brightfood-group/ This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 10 ABCC-2016-002 Directors chosen at the Sodiaal Union General Assembly. A Managing Director was selected from the Board to manage the company's operations and was granted substantial powers to carry out his duties. In 2002, Yoplait was generating approximately $53 million euros in earnings before interest, taxes, depreciation and amortisation (EBITDA) and was valued at $400 million euros. However, Yoplait's EBITDA for 2011 was projected to be approximately $153 million euros, approximately three times of that 40 in 2002. Lucien Fa, CEO of Yoplait, said that Yoplait was worth $1.5 billion euros or 12.5 times EBITDA, which he said was the average multiple of deals in the sector over the last two years for strong brands. (See Exhibit 5 - Overview of Yoplait Financials.) In 2002, Sodiaal owned a 50% stake in Yoplait, after PAI acquired the other 50% when Sodiaal was seeking fresh funds. In December 2010, PAI announced its intention to sell its 50% stake in Yoplait. Yoplait launched a competitive bidding process that attracted companies such as US's General Mills, Switzerland's Nestle SA, Mexico's Grupo Lala, AXA private equity, France's Groupe Lactalis and Bright Food. Yoplait - A Global Yogurt Franchise In the fiscal year ended 30 June 2010, Yoplait reported revenues of $724 million euros, with nearly half of its sales in the US. The organisation was founded in 1964 by regional French cooperatives to market their dairy products. 'Yoplait' was introduced as the national brand for a comprehensive range of dairy products in the French domestic market. The brand was very successful and began selling overseas through franchising arrangements in 1969. By 1977, Yoplait was present in 22 foreign countries. In the US, General Mills acquired the Yoplait franchise to manufacture and market its products in 1977. In 2011, Yoplait was the world's second largest dairy brand, with sales of $4.4 billion euros through its global franchise network. Through franchise agreements, the company produced yoghurts and dairy desserts in 33 manufacturing sites across 5 continents. With presence in almost 50 territories and more than 2,500 different products around the world, Yoplait became a global brand familiar to worldwide consumers. (See Exhibit 6 - Geographical Distribution of Yoplait's Brand Volumes around the World 2010/2011.) Since it acquired the franchise in 1977, General Mills was the sole distributor for Yoplait's products in the US. Yoplait was the market leader in the US with 35% market share, ahead of Danone's 30%. In 2010, Sodima, the licensing arm of Sodiaal, sought more lucrative terms and gave notice to General Mills to renegotiate the terms of a Manufacturing and Distribution Licence Agreement (Yoplait Licence Agreement). The agreement with General Mills was for more than 30 years and it was scheduled for renewal in 2012. After the failure to renegotiate royalty rates, Sodima served notice to General Mills. Reciprocating against the notice, General Mills filed for arbitration to preserve and enforce their rights under the Yoplait Licence Agreement. Bright Diary's Bid for Yoplait Given the growth in China's yoghurt consumption, the purchase of a major stake in a top global dairy brand such as Yoplait would strengthen Bright Food's competitive position in this market. (See Exhibit 7 to 9 - China's Dairy Markets.) Furthermore, the acquisition target would meet the globalisation goals set by the Chinese government for its SOEs. 40 Boyle, M. & Chassany, A. (2011, March 18). General Mills in Talks to Buy Yoplait Stake from PAI Partners. Bloomberg. Retrieved on December 30, 2014, from http://www.bloomberg.comews/2011-03-18/general-mills-intalks-to-buy-yoplait-stake-from-pai-partners.html This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 11 ABCC-2016-002 Among the bidders, Bright Diary placed the highest bid valuing Yoplait at $1.7 billion euros. Despite this, Sodiaal and PAI spurned the highest bidder and entered into an exclusive agreement to negotiate with General Mills instead. In July 2011, General Mills announced the completion of their acquisition of PAI's interests in Yoplait. General Mills valued Yoplait at $1.6 billion euros, or 12.6 times that of 2010 EBITDA. Total transaction value of the deal was US$1.2 billion of which US$930 million was for consideration to shareholders and US$231 million was for assumed liabilities. Both companies ended arbitration charges when the deal was completed. The deal was structured such that a distinction was made between the brand and the operating company. General Mills acquired a 51% stake in the manufacturing company Yoplait SAS and 50% of Yoplait Marques SAS which managed the brand and franchise activities. (See Exhibit 10 - Organisation Of Yoplait After Acquisition.) This structure allowed Sodiaal to remain as a key shareholder in the brand company. This agreement builds upon the long and very successful relationship between Yoplait, General Mills and Sodiaal. Sodiaal and General Mills are focused on continuing to grow and expand Yoplait as a strong, global brand. We welcome this opportunity to build on our partnership to 41 bring Yoplait to new consumers all around the world. Francois Iches Chairman, Sodiaal (See Exhibit 11 - M&A Trading Multiples In The Dairy Industry.) Australia's Manassen Foods Manassen Foods Australia Pty Ltd (Manassen Foods) was a privately-owned company in Australia's multi-faceted Fast Moving Consumer Goods (FMCG) industry. Established in 1953, its brand portfolio spanned many food categories in the retail and food services trade ranging from dry groceries, confectionery, biscuits and cakes, to perishables and frozen foods. Manassen Foods was ranked as one 42 of the top 40 suppliers in its industry. Bright Food's Bid In August 2011, Bright Food subsidiary Shanghai Tangjiu (Group) Co. Ltd (Shanghai Tangjiu) announced 43 that it had succeeded in acquiring a 75% stake in Manassen Foods in a transaction valuing the company at US$382 million. The remaining 25% stake in the Australian food manufacturer was retained 44 by the existing shareholders, including Roy Manassen, and other members of the senior management. Manassen Foods distribution network in Australia was seen as a good opportunity for Bright Food to introduce its portfolio of high quality products and brands into the Australian market. On the other hand, Bright Food could provide Manassen Foods export business with direct access to the fast-growing Chinese market. However, Bright Food's plans to use the Manassen Foods distribution network to introduce its dairy products into Australia were met with scepticism, given media reports of food safety 45 issues in China. 41 General Mills Completes Yoplait Acquisition. (2011, July). The Telegraph. Manassen Foods Australia. Retrieved March 14, 2013, from http://www.manassen.com.au/ 43 It is a private limited company. 44 Fung, E. (2011, August 18). China's Bright Food Acquires 75% Stake in Manassen Foods. The Wall Street Journal. 45 Smith, P. & Waldmeir, P. (2011, August). Bright Food agrees deal for Manassen. Financial Times. 42 This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 12 ABCC-2016-002 The Acquisition of Weetabix Ltd In early 2012, Bright Food was presented with another opportunity to acquire a top breakfast cereal brand owned by Weetabix Limited, operating as the Weetabix Food Company, and which produced and sold breakfast cereals. Based in the United Kingdom, the company had been founded in 1932 and the cereal was manufactured in England and Canada, with export to more than 80 countries. In May 2011, it was reported that Justice Holdings Ltd, a UK listed investment company, was seeking to make an offer for Weetabix Limited valuing the cereal company at 1 billion euros. Weetabix had sales of over 460 million euros in 2011 and employed around 1,800 people. (See Exhibit 12 - Overview of Weetabix Financials.) It had around 7% of the British breakfast cereal market, but given competition rules in UK, large market players such as Dorset were unable to launch bids for Weetabix. In May 2012, after exclusive negotiations with the seller, Bright Food Group acquired a 60% stake in Weetabix, with the other 40% acquired by Weetabix's management. Bright Food Group paid about 180 million euros cash for its share. Weetabix was valued at 1.2 billion euros (US$1.9 billion) at the time of the 46 purchase, including debt. For Bright Food, the acquisition would enable it to grow its share in the Chinese breakfast cereal market and the Group was confident of outperforming the market's 20% annual growth. Weetabix, which was also owned by other global cereal brands such as Alpen and Ready Brek, only had a small footprint in China. Traditional breakfast in the mainland had meant food such as rice gruel or deep-fried dough, often bought from street vendors. Although these were very different from Western breakfast preferences, cereals were beginning to catch on with the Chinese consumers. Weetabix's management also welcomed the deal and the additional investment it would bring. We are delighted about our partnership with Bright Food. We are confident that with Bright Food's support, we will be able to significantly strengthen our market position and expand our 47 business internationally. Giles Turrell CEO, Weetabix Post-acquisition, Bright Food announced plans to seek a listing for Weetabix on the Hong Kong Stock Exchange. An analyst from a research firm, CI Consulting, observed that \"Listing Weetabix on the stock 48 exchange would help mitigate the pressure from debt risks.\" Bright Food saw good future prospects for cereals. Chairman Wang Zongnan said: Bright Food will increase the level of investment in Weetabix brands and product innovation to facilitate its development in the international markets. We are confident that with support from Bright Food, Weetabix's sales in China will outperform the growth of the Chinese cereal 49 market. Acquisition of French Diva Bordeaux Shanghai Tangjiu also purchased 70% of shares of the French Diva Bordeaux Wine Company (Diva Bordeaux) in June 2012, immediately after Bright Food's acquisition of Weetabix. Pierre Beuchet, Diva Bordeaux's founder and chairman, together with Jean-Pierre Rousseau, its managing director, retained 46 47 48 49 Bright Food Mulls Listing Weetabix in Hong Kong. (2012, June). Euro Investor. Montague-Jones, G. (2012, November). Bright Food completes Weetabix takeover. The Grocer. (2012, November). Bright Food mulls listing Weetabix in Hong Kong. The Wall Street Journal. (2012, November). Bright Food acquires UK cereal maker's stake. China Daily. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 13 ABCC-2016-002 the remaining 30% stake. As an established wine distributor in the Bordeaux Region of France, Diva Bordeaux had credits and partnerships with many local wineries and maintained good relationships with top wineries in the region. It had clients from 7 out of the top 10 French wine chateaux, with stable consumers in over 40 countries and regions. It ranked ninth among similar wine agencies in France. In 2011, Diva Bordeaux generated sales of $33 million euros. In the same year, China's wine imports 50 increased by 27.78% to 36.56 kilolitres, about 24% of the total wine global market. As for Diva Bordeaux, 51 it was reported that it had 45% of its sales in China and 15% in other Asian markets. Shanghai Tangjiu was attracted by the increasing demand for imported wine among Chinese consumers and hoped to break into the middle and high-end French wine sector with the acquisition of Diva. The cooperation with a renowned wine company will offer more excellent wine brands and resources to the Bright Food Group and Shanghai Tangjiu Group, lay the foundation for the groups to carry out comprehensive cooperation with the local winery industry, and create advantages for pushing the rapid development of the groups' wine businesses. We give full 52 respect to the Diva Bordeaux and Mr. Rousseau's team. Ge Junjie Board Chairman, Shanghai Tangjiu Group The price of the acquisition was undisclosed but Pierre Beuchet was pleased at the opportunity to break into China's domestic market. The partnership with the Shanghai Tangjiu Group will further promote the Diva Bordeaux's development, strengthen its capital power and create a new opportunity for it to develop in the most dynamic market in the world. In addition, the Diva Bordeaux and the Shanghai Tangjiu Group will work hand in hand to establish a wine training school to improve Chinese consumers' 53 appreciation level and further promote French wine's long-term development in China. Jean-Pierre Rousseau Founder and Chairman, Diva FURTHER GLOBAL ACQUISITIONS With two years of numerous international acquisition initiatives, Bright Food Group was looking forward to increasing its overseas footprint, while strengthening its competitive position in China's large food industry. This is only the start of Bright Food's globalisation. Our company will definitely conduct more 54 deals focusing on our main businesses, such as dairy, sugar and wine. Ge Junjie Vice-President, Bright Food 50 51 52 53 54 Chinese rice wine giant buys into French wine franchiser. (2012, December). Morning Whistle. Bright Food buys a stake in Bordeaux wine exporter Diva. (2012, June 27). Want China Times. Ceremony of delivering 70% of shares of the French Diva Bordeaux Wine Company successfully held. (2012, July 23). People's Daily Online. ibid. Shen, J. (2012, March 8). Food companies show appetite for growth through overseas M&A. China Daily. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 14 ABCC-2016-002 APPENDIX 1 STRUCTURE AND GOVERNANCE OF CHINESE STATE-OWNED ENTERPRISES The Chinese economy was one of the most rapidly growing economies in the world in the last decade of th st 20 century and the first decade of the 21 century. With China's transformation from a command economy to a market economy, the Chinese state-owned enterprises (SOEs) played a significant role in building up the Chinese economy. The term 'state-owned enterprises' refers to business entities established by the central and local governments, and whose supervisory officials were from the government. Most importantly, this definition 55 of 'state-owned enterprises' included only wholly state-funded firms. Over the years, SOE reform had gone through various stages. In the first stage in the early 1980s, all SOEs were government-owned and only some were allowed to manage their businesses by retaining profits from their operations. It was only in the early 1990s that 'privatization' of SOEs started. In 1993, a new reform plan known as corporatization was publicized with the aim of reorganising SOEs into 'modern enterprise system that suits the needs of a market economy, with clearly defined ownership, rights and 56 responsibility.' However, the SOE reform during this period of time was slow due to a lack of conducive macroenvironmental circumstances. Government officials weighed the prospect of massive layoffs necessary to restructure bloated SOEs, and privatization was also met with resistance from influential company managers, many of whom were Communist party officials. Restructuring was also a challenge as SOE managements faced problems in retrenching employees. In the early 1990s, a nationwide capital market with stock exchanges acting as the main agent was gradually developed and, with this, the number of listed companies had grown exponentially. Most of the listed companies were restructured SOEs that had gone through shareholding reform. As the state government still held controlling shares in these listed companies, many of the old SOE management styles and mechanisms were maintained. Meanwhile, as the number of listed SOEs grew, their governance also became an issue and this was a major item on the agenda of China's capital market 57 development at this time. By the end of 2001, China became a member of World Trade Organisation (WTO), promising further 58 trade and financial liberalisation. Since joining the WTO, China reviewed its trade-related laws and regulations to make them WTO-compliant. It also reduced all import tariffs according to the schedule of the accession agreement. This opening up resulted in China's foreign trade increasing from about 59 US$500 billion in 2001 to more than US$2 trillion in 2010. In 2010, China could be considered to have the largest number of state-owned-enterprises (SOEs) in the world. As of 2008, the SOEs had a total asset valuation of US$ 6 trillion, which was 133% of the size Of China's economy. In 2010, total assets of the 120 centrally-controlled SOEs made up 62% of China's 60 GDP. 55 56 57 58 59 60 OECD. (2009, January 26). State Owned Enterprises In China: Reviewing the Evidence. Wang, Zhengxu. Reforming State-Owned Enterprises in China: Two Decades of Struggles. OECD. (2011). OECD-China Policy Dialogue on Corporate Governance. Corporate Governance of Listed Companies in China. Li, M. (2008, October). Three Essays on China's State Owned Enterprises: Towards an Alternative to Privatization. Sun, Z. (2011, June). Joining WTO was a positive move. China Daily. Miao, Y. (2012, April). Overseas Listing and State-Owned-Enterprise Governance in China: the Role of the State. Harvard Law School. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 15 ABCC-2016-002 Source: Adapted from Tricker, B.(2009). Corporate Governance: Principles, policies and practices. UK: Oxford University Press. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 16 ABCC-2016-002 EXHIBIT 1 CHINA DAIRY RANK BY OPERATING INCOME 2012 Rank Company Ranking Operating Income (in RMB billion) 1 Inner Mongolia Yili Industrial Group Co. Ltd 417.4 2 China Mengniu Dairy Co., Ltd 360.8 3 Bright Dairy & Food Co., Ltd 136.3 Source: China's Dairy Industry. (2013, December). Tusiad China Business Insights. Retrieved January 12, 2015, from http://www.tusiad.org/__rsc/shared/file/ChinaBusinessInsight-December2013.pdf EXHIBIT 2 TOP CHINESE FOOD AND BEVERAGE BRANDS OF 2010 Rank Company Industry 12 Maotai Liquor 15 Wu Liang Ye Liquor 20 Mengniu Dairy 22 Changyu Wine 23 Yili Dairy 42 Bright Dairy Dairy Source: Adapted from China's top food and beverage brands of 2010. (2010, December 24). The Independent. Retrieved December 30, 2014, from http://www.independent.co.uk/life-style/food-and-drink/chinas-top-food-andbeverage-brands-of-2010-moatai-wu-liang-ye-mengniu-2168568.html This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 17 ABCC-2016-002 EXHIBIT 3 OVERVIEW OF SUCROGEN FINANCIALS Figures in A$ (millions) Year Ending 31 March 2009 2010 1,410.7 1,737.30 83.7 135.7 EBITDA 140.1 196.9 EBITDA Margin 9.9% 11.3% Profit before Tax 81.9 120.7 53.9 79.3 1,425.4 1,549.4 Total Liabilities 788.2 773.9 Net Asset Value 562.7 696.5 Net Tangible Assets 454.0 580.8 Revenue EBIT 1 Net Profit Total Assets 1 Note: Net of minority interests Business Unit EBIT Contribution Year Ending 31 March 2009 2010 Cane Products 35.2 85.6 Sweeteners 44.7 53.2 Bioethanol 11.0 4.0 Corporate (7.3) (7.1) Total EBIT 83.7 135.7 Source: Wilmar. (2010, July 6). Sucrogen Overview. [Presentation]. Retrieved December 30, 2014, from http://media.corporateir.net/media_files/IROL/16/164878/shareholdings/20100706Wilmar_Sucrogen_Analyst_Present ation_Part2.pdf This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 18 ABCC-2016-002 EXHIBIT 4A OVERVIEW OF BRIGHT DAIRY FINANCIALS Figures in RMB (millions) Year Ending 31 December 2009 2010 2011 2012 Revenue 7,937.1 9,565.3 11,782.6 13,773.7 Gross Profit 2,976.5 3,245.5 3,869.2 4,758.3 Operating Profit 175.1 230.0 240.7 472.6 Profit before Tax 189.8 238.9 234.9 413.2 Net Profit 122.5 194.4 237.8 311.3 Total Assets 4,202.2 5,991.6 7,394.9 9,433.5 Total Current Assets 2,236.6 3,124.4 3,771.4 5,056.4 Net Property, Plant & Equipment 1,636.8 2,316.2 2,830.9 3,533.6 Total Liabilities 1,917.7 3,207.3 4,403.0 4,837.5 Total Current Liabilities 1,835.6 2,578.9 3,838.1 4,053.9 67.4 567.3 504.4 708.5 Long-Term Debt Source: Bright Dairy. (2014). Bright Dairy Financials. EXHIBIT 4B OVERVIEW OF SYNLAIT MILK FINANCIALS Figures in NZD (millions) Year Ending 31 July 2010 2011 233.4 298.9 23.7 21.1 3.8 (1.2) (8.6) (4.3) Net Profit (11.7) (3.1) Total Assets 151.0 247.8 48.7 66.7 Net Property, Plant & Equipment 102.2 178.2 Total Liabilities 150.5 173.0 Total Current Liabilities 142.8 99.8 0 63.8 Revenue Gross Profit Operating Profit Profit before Tax Total Current Assets Long-Term Debt Source: Synlait Milk. (2014). Synlait Milk Financials. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 19 ABCC-2016-002 EXHIBIT 5 OVERVIEW OF YOPLAIT FINANCIALS Figures in (millions) 2009 2010 2011 2012 Revenue 824.5 860.1 782.9 681.8 Gross Profit 467.3 500.2 404.1 333.5 Operating Profit 10.8 38.3 59.9 42.3 Profit before Tax 5.5 33.6 58.1 40.6 Net Profit 5.5 33.5 39.9 29.3 Total Assets 309.1 345.8 270.8 286.0 Total Current Assets 132.1 149.4 123.2 135.5 Total Liabilities 297.8 306.1 233.9 223.4 Total Current Liabilities 285.7 241.6 232.3 222.1 12.1 11.4 1.4 1.3 Total Long-Term Liabilities 1 1 Year Ending 30 June rd Till 3 Quarter Source: (2014). Yoplait Financials. Factiva. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 20 ABCC-2016-002 EXHIBIT 6 GEOGRAPHICAL DISTRIBUTION OF YOPLAIT BRAND VOLUMES AROUND THE WORLD (2010/2011) Source: Yoplait. Company Key Figures. Retrieved from December 30, 2014, from http://www.yoplait.fr/the_group/yoplait_around_the_world/activities_and_figures EXHIBIT 7 CHINA DAIRY MARKET VALUE FORECAST: 2010-15 Year $ million RMB million million % Growth 2010 17,326.2 117,449.8 13,049.3 8.8 2011 18,941.2 128,397.4 14,265.6 9.3 2012 20,652.9 140,001.0 15,554.8 9.0 2013 22,530.0 152,725.0 16,968.5 9.1 2014 24,567.6 166,537.5 18,503.1 9.0 2015 26,725.9 181,168.4 20,128.7 8.8 CAGR: 2010-15 9.1 Source: MarketLine Industry Profile. (2012, February). Dairy in China, p.13. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 21 ABCC-2016-002 EXHIBIT 8 CHINA DAIRY MARKET CATEGORY SEGMENTATION: % SHARE, BY VALUE, 2006-2010 Category 2006 2007 2008 2009 2010 Milk 62.3% 61.5% 60.5% 50.7% 50.9% Yoghurt & Fromage Frais 29.9% 30.9% 32.0% 40.2% 40.4% Spreadable fats 7.2% 6.9% 6.8% 8.1% 7.7% Cheese 0.6% 0.6% 0.7% 0.9% 0.9% Cream 0.0% 0.0% 0.0% 0.0% 0.0% Chilled desserts 0.0% 0.0% 0.0% 0.0% 0.0% Total 100% 99.9% 100% 99.9% 99.9% Source: MarketLine Industry Profile. (2012, February). Dairy in China. EXHIBIT 9 CHINA DAIRY MARKET CATEGORY SEGMENTATION: US$ MILLION, BY VALUE, 2006-2010 Category 2006 2007 2008 Milk 9,763.3 10,461.7 11,035.3 8,076.8 8,815.0 Yoghurt & Fromage Frais 4,688.8 5,263.5 5,836.1 6,410.1 6,994.4 Spreadable fats 1,121.7 1,178.6 1,234.8 1,289.3 1,342.5 Cheese 91.2 106.5 123.6 142.2 163.4 Cream 4.8 5.1 5.5 5.8 6.2 Chilled desserts 4.0 4.1 4.3 4.5 4.7 15,673.8 17,019.6 18,239.6 15,928.7 17,326.2 Total 2009 2010 Source: MarketLine Industry Profile. (2012, February). Dairy in China, p. 8. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 22 ABCC-2016-002 EXHIBIT 10 ORGANISATION OF YOPLAIT AFTER ACQUISITION Source: Boyle, M. (2011, May 19). General Mills Agrees to Acquire Yoplait for $1.15 Billlion. Bloomberg News. Retrieved on January 12, 2015, from http://www.bloomberg.comews/2011-05-18/general-mills-to-buy-yoplait-for-115-billion.html and French dairy cooperatives Sodiaal and 3A agree to merge. (2013, July 1). FoodBev.com. Retrieved on January 12, 2015, from: http://www.foodbev.comews/french-dairy-cooperatives-sodiaal-and-3a This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017. For the exclusive use of L. Hampton, 2017. Page 23 ABCC-2016-002 EXHIBIT 11 M&A TRADING MULTIPLES IN THE DAIRY INDUSTRY 2010 2011 2012 2013 1.4x 1.5x 1.6x 1.7x Total Enterprise Value / Earnings bef. Interest, Taxes and Depreciation 10.0x 10.9x 11.6x 11.7x Total Enterprise Value / Earnings bef. Interest and Tax 12.4x 13.6x 14.6x 14.6x Price/Earnings 17.5x 18.5x 20.3x 20.5x Price /Book Value 2.6x 2.8x 3.1x 3.2x Price/Tangible Book Value 3.5x 3.8x 4.5x 4.6x Total Enterprise Value / Total Revenue Source: (2015, January 13). Dairy Products Key Stats & Ratios. Capital IQ. EXHIBIT 12 OVERVIEW OF WEETABIX FINANCIALS Figures are in (millions) Year Ending 31 December 2009 2010 2011 Revenue 322.2 325.9 335.0 354.6 Gross Profit 124.9 130.3 128.6 137.2 Operating Profit 79.1 87.4 81.6 92.6 Profit before Tax 97.2 133.6 86.2 95.7 Net Profit 97.0 130.4 81.7 91.4 Total Assets 625.9 757.4 802.1 591.1 Total Current Assets 487.2 595.0 686.3 469.9 Net Property, Plant & Equipment 105.9 112.5 77.0 82.2 65.9 49.7 55.7 62.8 3.6 4.4 4.3 3.5 Total Current Liabilities Total Long-Term Liabilities 2012 Source: (2014). Consolidated from Weetabix Balance Sheet and Weetabix Income Statement 2009-2013. This document is authorized for use only by Lavette Hampton in Financial_Statement_Analysis taught by Rodolfo Biasca, Kaplan University from February 2017 to August 2017