Inside

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Merger and Acquisition Activity Commodity Review Stock Price Performance and Public Market Variations Comparable Company Analysis

Food and Agribusiness Industry Insights

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 todays consumer desires economical, private label, comfort foods.

Q4 2009

Macroeconomic Factors Duff & Phelps Experience

A 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 & Poors (S&P) Industry Surveys: Trends & Projections are highlighted in the below chart. Key U.S. Macroeconomic Indicators
2008A Nominal Gross Domestic Product growth Average unemployment rate Disposable personal income growth Consumer Price Index U.S. Dollar appreciation 2.6% 5.8% 3.9% 3.8% -4.4% 2009E -1.4% 9.3% 1.4% -0.3% 4.4% 2010P 3.1% 10.3% 2.8% 1.8% -10.3%

Contact
H. Glen Clarke Managing Director +1 312 697 4680 glen.clarke@duffandphelps.com

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

A Look into 2010: Improved Market Stability Expected

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 Prices

Agricultural 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&Ps 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 USDAs 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.

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Food and Agribusiness Industry Insights Q4 2009

A Look into 2010: Improved Market Stability Expected

Consumer Trends: Demand for Inexpensive Comfort Foods

Due 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
2005 Food at home Cereal & bakery products Meats, poultry, fish & eggs Dairy & related products Fruits & vegetables Nonalcoholic beverages Sugar & sweets Fats & oils Other prepared foods Food away from home All food
Source: US Bureau of Labor Statistics (1) 2009 and 2010 Forecast as of December 24, 2009

2006 1.7% 1.8% 0.8% -0.6% 4.8% 2.0% 3.8% 0.2% 1.4% 3.1% 2.4%

2007 4.2% 4.4% 3.8% 7.4% 3.8% 4.1% 3.1% 2.9% 1.8% 3.6% 4.0%

2008 6.4% 10.2% 4.2% 8.0% 6.2% 4.3% 5.5% 13.8% 5.2% 4.4% 5.5%

2009F1 0.5% to 1.5% 3.0% to 4.0% 0.0% to 1.0%

2010F1 2.5% to 3.5% 3.0% to 4.0% 1.5% to 2.5%

1.9% 1.5% 2.4% 1.2% 3.7% 2.9% 1.2% -0.1% 1.6% 3.1% 2.4%

-7.0% to -6.0% 2.5% to 3.5% -2.5% to -1.5% 3.0% to 4.0% 2.0% to 3.%0 5.0% to 6.0% 2.5% to 3.5% 4.0% to 5.0% 2.5% to 3.5% 3.5% to 4.5% 4.0% to 5.0% 2.5% to 3.5%

3.0% to 4.0 % 3.5% to 4.5% 1.5% to 2.5% 3.0% to 4.0%

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.

Food and Agribusiness Industry Insights Q4 2009

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A Look into 2010: Improved Market Stability Expected

Processor Trends: Private Label Continues to Take Market Share

Improved 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 PepsiCos 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 Krafts acquisition of Cadbury, Dean Foods acquisition of Alpro NV, and Coca-Colas unsuccessful attempt to purchase Chinas 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 Americas 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.

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Food and Agribusiness Industry Insights Q4 2009

Merger and Acquisition Activity

U.S. Food and Agribusiness M&A Trends
Although 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 $1 billion during 2008. Domestic M&A Deal Value and Volume 350 300
Total Deal Value ($ in bn) Aggregate Deal Volume

$35 $30

Aggregate Deal Volume

Total Deal Value ($ in bn)

250 200 150 100 50 0

$25 $20 $15 $10 $5 $0

2003

2004

2005

2006

2007

2008

2009

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

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 Aktiengesellschafts acquisition of Morton International from Rohm and Haas for $1.7 billion; Viterras acquisition of ABB Grain for $1.7 billion; PepsiCos acquisition of Pepsi Bottling Group and PepsiAmericas for $7.8 billion; JBS USAs acquisition of Pilgrims Pride out of bankruptcy for $2.9 billion; and Pinnacle Foods acquisition of Birds Eye foods for $1.5 billion, prior to Birds Eyes initial public offering. In addition, in mid-January 2010, Kraft Foods agreed to acquire Cadbury, a British confectionary producer, for $22.3 billion.

Food and Agribusiness Industry Insights Q4 2009

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Merger and Acquisition Activity

No particular subsector of the food and agribusiness industries dominated M&A activity during 2009. Domestic Food and Agribusiness M&A Volume by Subsector
Seed Protein Processed Foods Other Beverages Other Agriculture Dairy Baked Goods / Snack Foods Alcoholic Beverages
Source: Capital IQ

2009 2008

10

20 30 40 Total Domestic M&A Deals

50

60

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 2004the last time the U.S. economy came out of a recession.

Notable Deal of the Fourth Quarter 2009: Nestl 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 Nestl 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.
6 | Food and Agribusiness Industry Insights Q4 2009

Merger and Acquisition Activity

Select Domestic Mergers and Acquisitions, October 1, 2009 through December 31, 2009
Announced Date
12/31/09 12/23/09 12/21/09 12/21/09 12/20/09 12/17/09 12/16/09 12/14/09 12/11/09 12/11/09 12/8/09 12/3/09 12/3/09 12/2/09 11/30/09 11/30/09 11/27/09 11/25/09 11/24/09 11/23/09 11/23/09 11/20/09 11/20/09 11/19/09 Source: Capital IQ

Seller (Target)
Maui Land & Pineapple Co. Inc. (Haliimaile Pineapple Co.) HJ Heinz Co. (Appetizers And, Inc.) Jones Soda Co. (NasdaqCM:JSDA) Angostura International Ltd. HM Capital Partners LLC (Sturm Foods, Inc.) CapitalSouth Partners, Harbert Mezzanine Partners, and Azalea Capital (Spartan Foods Of America, Inc.) Authentic Mexican, Inc. U.S. Mills, Inc. (Uncle Sam and Erewhon Cereal brands) Yorktown Bakery LLC U.S. Mills, Inc. (Farina Mills brand assets) Parent Seed Farms Ltd. Green Meadows Foods, LLC Whitaker Foods, Inc. Castle Brands, Inc. (Sam Houston brand) Otter Creek Brewing, Inc. C.J. Foods, Inc. Cains Foods (Westminster Cracker Company, Inc.) XT-2000, Inc. And Xtermite, Inc. Thompsons Limited (Hyland Seeds) HydraLogic Systems, Inc. Arthurs Fresh Company Ltd. MGP Ingredients, Inc. (Illinois Corn Processing, LLC) Birchmere Capital Management LLC (Penn Brewery) Diedrich Coffee, Inc.

Subsector
Processed Foods Processed Foods Other Beverages Processed Foods Processed Foods Processed Foods Processed Foods Processed Foods Baked Goods / Snack Foods Processed Foods Seed Dairy Processed Foods Alcoholic Beverages Alcoholic Beverages Processed Foods Baked Goods / Snack Foods Other Agriculture Seed Other Agriculture Other Beverages Alcoholic Beverages Alcoholic Beverages Other Beverages

Parent
Investor group Brazos Private Equity (Golden County Foods, Inc.) Big Red, Inc. Mizkan Americas, Inc. Treehouse Foods, Inc. Linsalata Capital Partners M&S Fine Foods, Inc. Attune Foods, Inc. David's Cookies, Inc. Malt-O-Meal Company Alliance Grain Traders, Inc. Agropur Cooperative (Trega Foods Ltd.) Advance Food Company, Inc. Western Spirits Beverage Company, LLC Long Trail Brewing Company Trinity Hunt Partners LaSalle Capital Group, L.P. Organic Products International Corp. Dow Agro Sciences Canada. Inc. Equity Capital Management plc

Rationale
Private equity Product line diversification Consolidation Product line diversification Consolidation Private equity Product line diversification Product line diversification Consolidation Consolidation Product line diversification Consolidation Product line diversification Consolidation Consolidation Private equity Private equity Consolidation Consolidation Private equity

($US million)

Enterprise Value
NA NA 2.2 2.7 660.0 NA NA NA NA NA 9.4 NA NA NA NA NA NA NA NA 5.0 NA 30.0 NA 224.5

H.J. Heinz Company of Canada Ltd. Product line diversification SEACOR Energy, Inc. Investor group Green Mountain Coffee Roasters, Inc. Product line diversification Private equity Consolidation

Food and Agribusiness Industry Insights Q4 2009

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Merger and Acquisition Activity

Select Domestic Mergers and Acquisitions, October 1, 2009 through December 31, 2009
Announced Date
11/19/09 11/18/09 11/16/09 11/13/09 11/12/09 11/11/09 11/9/09 11/5/09 11/4/09 11/2/09 10/31/09 10/31/09 10/26/09 10/26/09 10/19/09 10/19/09 10/18/09 10/15/09 10/14/09 10/8/09 10/5/09 10/5/09 Source: Capital IQ

Seller (Target)
Goldner Hawn Johnson & Morrison and MVC Capital (Vitality Foodservice, Inc.) Vestar Capital Partners (Birds Eye Foods, Inc.) Source Verified Foods, LLC (Vande Rose Farms, LLC) Sun Capital Partners (Timothys Coffees of the World, Inc.) Kraft Foods, Inc. (Balance Bar Company) GE Capital Corp. (Farmland Dairies, LLC / New Jersey facility) ERTH Solutions, Inc. United Liquor Alliance, Inc. A. Duda & Sons, Inc. / Juice business Cohutta Water, Inc. Sapphire Wines LLC Sweet Indulgence Bakery The Tanglefoot Company Rocky Roaster, LLC Leo's Foods, Inc. Cape Cod Aquaculture Corp. Andrew Peller Ltd. (Granville Island Brewing Company Ltd.) Meridian LLC Shot Spirits Corporation Monterey Gourmet Foods, Inc. CHAMP Private Equity and Castle Harlan, Inc. (United Malt Holdings, LP) Superior Quality Foods, Inc.

Subsector
Other Beverages Processed Foods Protein Other Beverages Baked Goods / Snack Foods Dairy Other Agriculture Alcoholic Beverages Other Beverages Other Beverages Alcoholic Beverages Baked Goods / Snack Foods Other Agriculture Other Beverages Baked Goods / Snack Foods Protein Alcoholic Beverages Other Beverages Alcoholic Beverages Processed Foods Alcoholic Beverages Protein

Parent
Nestle S.A. (Nestle Professional) The Blackstone Group (Pinnacle Foods Finance LLC) Tigerhawk Proteins, LLC Green Mountain Coffee Roasters, Inc. Brynwood Partners Grupo Lala, S.A. De C.V. Outlook Resources, Inc. RMD Entertainment Group Peace River Citrus Products, Inc. Crystal Springs Water Co. Saint James Company Management group Contech Enterprises, Inc. The Supreme Bean, Inc. Flowers Foods, Inc. Management group Creemore Springs Brewery Limited The Hain Celestial Group, Inc. Green Bridge Industries, Inc. Pulmuone Holdings Co., Ltd. (Pulmuone U.S.A., Inc.) GrainCorp. Ltd. Southeastern Mills, Inc.

Rationale
Consolidation Consolidation Consolidation Consolidation Private equity Globalization Product line diversification Consolidation Consolidation Consolidation Consolidation Private equity Consolidation Consolidation Product line diversification Private equity Consolidation Consolidation Product line diversification Product line diversification Consolidation Product line diversification

($US million)

Enterprise Value
208.0 1,434.1 NA 157.0 NA NA 1.4 NA NA NA 12.0 NA NA NA NA NA NA NA NA 42.0 662.6 NA

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Food and Agribusiness Industry Insights Q4 2009

Commodity Review
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 during 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 Soybeans

Corn 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 becomes 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 national 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 worlds fourth largest exporter of wheat, has experienced unusually dry weather conditions that will likely affect crop yields this year. $18 $15 $12 $9 $6 $3 $0
Jan-06
Source: Bloomberg

$/Bushel

$9.22

$4.34 $3.42

Aug-06

Mar-07 Corn

Oct-07

May-08 Wheat Soy

Dec-08

Jul-09

Mar-10

Food and Agribusiness Industry Insights Q4 2009

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Commodity Review

Orange Juice
Orange 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 worlds 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. $2.5 $2.0 $/ Pound $1.5 $1.0 $0.5 $0.0
Jan-06
Source: Bloomberg

$1.50

Aug-06

Mar-07

Oct-07

May-08 Orange Juice

Dec-08

Jul-09

Mar-10

Natural Gas
Natural 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. $14 $12 Henry Hub $/MMB tu $10 $8 $6 $4 $2 $0
Jan-06
Source: Bloomberg

$4.55

Aug-06

Mar-07

Oct-07

May-08 Natural Gas

Dec-08

Jul-09

Mar-10

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Food and Agribusiness Industry Insights Q4 2009

Stock Price Performance and Public Market Variations

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 280 Index Value as of January 2007 240 200 160 120 80 40 0
Jan-07 May-07 Sep-07 Jan-08 May-08 Food Oct-08 Beverage Feb-09 Jun-09 Oct-09 Mar-10 Agribusiness S&P 500 60.9% 12.7% 9.9% -19.2%

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
13.0x
Historical EV/EBITDA Multiple Average 9.4x

EV/ EBITDA Multiple

11.0x
10.6x

9.0x

9.1x

7.0x Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
D&P Food Composite D&P Beverage Composite Historical Average

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.

Food and Agribusiness Industry Insights Q4 2009

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Comparable Company Analysis

AGRIBUSINESS
RECENT STOCK PRICE(1) $68.16 $104.74 $61.60 $116.81 $45.44 % OF 52W HIGH 95.4% 95.2% 90.2% 92.4% 97.3% 95.2% 94.1% $72.50 $8.19 $282.00 77.7% 62.4% 99.7% 77.7% 79.9% $33.50 $30.62 $63.27 $34.77 $60.03 $11.22 $9.83 89.2% 92.8% 85.5% 99.5% 97.4% 92.3% 85.6% 92.3% 91.8%
MARKET CAP(2) (MM) ENTERPRISE VALUE (3) (MM)

MULTIPLES ENTERPRISE VALUE/ REVENUE EBITDA (4) 1.26x 1.62x NM NM 3.00x 1.62x 1.96x 3.82x 1.09x 2.56x 2.56x 2.49x 0.26x 0.42x 0.32x 0.82x 0.39x 0.75x 0.65x 0.42x 0.51x 12.2x 5.0x NM NM 12.0x 12.0x 9.8x 11.9x 13.7x 12.2x 12.2x 12.6x NM 10.6x NM 7.4x 7.7x NM 13.3x 9.1x 9.7x TOTAL DEBT/ EBITDA 1.9x 0.0x 1.4x 3.5x 1.5x 1.5x 1.7x 0.6x 4.8x 1.5x 1.5x 2.3x NM 3.2x NM 1.3x 2.0x NM 4.9x 2.6x 2.9x

OPERATING STATISTICS TTM REVENUE GROWTH (5) -9.0% -33.5% -52.6% -59.3% -45.3% -45.3% -39.9% -10.0% 7.4% -5.4% -5.4% -2.7% -13.3% -20.6% -20.3% -6.9% -8.7% 28.8% -2.1% -8.7% -6.2% TTM MARGINS GROSS EBITDA 21.3% 32.2% 15.1% 28.1% 24.4% 24.4% 24.2% 55.7% 21.4% 49.0% 49.0% 42.0% 8.4% 4.9% 2.9% 14.2% 20.9% 6.7% 12.8% 8.4% 10.1% 10.3% NM NM 31.4% 25.0% 25.0% 22.2% 32.1% 8.0% 21.0% 21.0% 20.4% 3.0% 3.9% 0.8% 11.1% 5.1% NM 4.9% 4.4% 4.8%

COMPANY NAME Fertilizer Agrium Inc. CF Industries Holdings, Inc. Mosaic Co. Potash Corp. of Saskatchewan, Inc. Terra Industries Inc. Median Mean Seed Monsanto Co. Nufarm Ltd. Syngenta AG Median Mean Other Agribusiness The Andersons, Inc. Archer-Daniels-Midland Co. Bunge Ltd. Corn Products International Inc. Nutreco Holding NV Penford Corp. Viterra, Inc. Median Mean

$10,720.9 $5,088.1 $27,422.0 $34,587.3 $4,548.8 $10,720.9 $16,473.4 $39,561.4 $1,787.5 $26,221.2 $26,221.2 $22,523.4 $613.1 $19,676.1 $9,101.6 $2,611.1 $2,100.7 $127.6 $3,652.0 $2,611.1 $5,411.7

$11,504.7 $4,226.7 $26,207.0 $38,250.0 $4,744.8 $11,504.7 $16,986.6 $41,152.4 $2,639.8 $28,148.8 $28,148.8 $23,980.3 $775.1 $25,937.1 $13,219.6 $3,003.1 $2,418.6 $197.4 $4,198.6 $3,003.1 $7,107.1

FOOD
Protein High Liner Foods Inc. Industrias Bachoco S.A.B. de C.V. JBS S.A. Maple Leaf Foods Inc. Sanderson Farms Inc. Seaboard Corp. Smithfield Foods Inc. Tyson Foods Inc. Median Mean $10.22 $19.86 $5.34 $10.41 $50.13 $1,392.00 $19.09 $17.24 99.2% 81.4% 86.0% 88.7% 94.9% 88.9% 96.1% 98.0% 91.9% 91.7% $176.2 $993.0 $7,466.7 $1,424.0 $1,021.5 $1,720.5 $3,165.8 $6,492.5 $1,572.3 $2,807.5 $253.9 $879.0 $9,625.5 $2,491.2 $1,124.8 $1,433.4 $5,776.6 $8,640.5 $1,962.3 $3,778.1 0.42x 0.48x 0.47x 0.49x 0.62x 0.38x 0.50x 0.32x 0.47x 0.46x 5.9x 5.4x 12.9x 7.4x 5.3x 10.1x NM 6.3x 6.3x 7.6x 1.8x 0.5x 4.4x 3.0x 0.5x 1.1x NM 2.5x 1.8x 2.0x 1.8% 15.6% 33.5% -0.4% 4.0% -6.9% -5.5% -0.3% 0.7% 5.2% 16.3% 16.9% 8.8% 14.1% 13.0% 6.2% 4.5% 6.4% 10.9% 10.8% 7.1% 8.9% 3.6% 6.6% 11.7% 3.7% 0.7% 5.1% 5.9% 5.9%

(1) As of 3-7-10 (2) Market Capitalization is the aggregate of a firms 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 Months Source: Capital IQ.

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Food and Agribusiness Industry Insights Q4 2009

Comparable Company Analysis

FOOD, contd
RECENT STOCK PRICE(1) $5.52 $16.00 $60.19 $3.68 $29.29 % OF 52W HIGH 85.5% 72.4% 99.9% 90.6% 96.8% 90.6% 89.0% $14.54 $34.39 $25.29 $13.96 $12.03 $20.16 $72.69 $16.97 $41.45 $46.40 $41.84 $59.66 $52.93 $29.34 $38.00 $49.25 $68.23 $13.95 $28.17 $44.52 $30.25 98.3% 96.1% 100.0% 99.8% 93.5% 81.4% 99.2% 85.3% 98.1% 99.9% 98.0% 94.7% 95.5% 97.5% 100.0% 97.1% 99.3% 99.4% 100.0% 98.9% 98.6% 98.3% 96.7% $37.80 $40.18 $25.72 $66.07 $7.87 $42.49 $21.57 $7.05 70.0% 99.8% 96.4% 92.0% 97.7% 94.9% 76.3% 89.2% 93.5% 89.6%
MARKET CAP(2) (MM) ENTERPRISE VALUE (3) (MM)

MULTIPLES ENTERPRISE VALUE/ REVENUE EBITDA (4) 0.54x 0.64x 2.28x 0.65x 1.14x 0.65x 1.05x 0.96x 1.89x 1.13x 1.16x 0.47x 0.46x 2.03x 0.89x 1.56x 1.82x 0.84x 1.71x 1.96x 1.49x 1.86x 2.12x 1.28x 0.85x 3.19x 1.28x 1.74x 1.49x 1.46x 0.90x 1.39x 1.00x 0.39x 1.29x 1.05x 0.87x 0.87x 0.95x 0.97x 6.1x 10.3x 11.2x 8.3x 10.2x 10.2x 9.2x 9.0x 8.5x 8.5x 6.9x 7.9x 6.3x 9.0x 11.4x 7.9x 10.3x 7.8x 7.7x 9.8x 9.3x 10.3x 13.3x 8.0x 6.1x NA 11.3x 10.2x 8.7x 9.0x 8.5x 12.1x 9.1x 7.2x 9.5x 7.0x 8.5x 15.5x 8.8x 9.7x TOTAL DEBT/ EBITDA 2.9x 6.1x 0.0x 3.9x 0.8x 2.9x 2.7x 1.4x 1.6x 2.1x 2.5x 5.5x 1.2x 2.0x 3.0x 1.5x 2.6x 0.5x 0.9x 1.9x 2.9x 1.7x 1.5x 2.5x 1.6x 0.1x 2.4x 1.5x 1.7x 1.9x 2.8x 1.7x 0.9x 3.5x 2.3x 0.0x 1.2x NA 1.7x 1.8x

OPERATING STATISTICS TTM REVENUE GROWTH (5) 1.6% -10.4% -1.6% -8.9% 5.1% -1.6% -2.8% 12.4% -5.0% 2.1% 11.9% -8.9% -2.6% 2.7% -11.7% 3.2% 2.3% -3.7% NA -1.9% -3.7% 0.5% -2.4% 24.6% 2.2% 1.7% 0.7% -1.7% 0.6% 1.1% 20.7% 2.5% 7.7% -0.8% 41.5% 3.3% 7.7% 6.5% 7.1% 11.1% TTM MARGINS GROSS EBITDA 28.7% 27.9% 100.0% 16.2% 11.2% 27.9% 36.8% 23.4% 41.2% 25.0% 31.3% 11.2% 9.5% 40.8% 25.8% 38.9% 35.8% 17.4% 38.1% 43.7% 36.2% 41.7% 56.8% 27.7% 38.8% 35.2% 21.5% 100.0% 35.8% 35.2% 27.0% 25.2% 46.5% 24.6% 52.8% 32.4% 40.3% 34.1% 33.3% 35.4% 8.9% 6.2% 20.3% 7.8% 11.2% 8.9% 10.9% 10.7% 22.3% 13.3% 16.9% 6.0% 7.3% 22.5% 7.9% 19.6% 17.7% 10.7% 22.3% 20.1% 16.1% 18.1% 16.0% 16.0% 13.9% 18.8% 11.3% 17.0% 16.1% 15.5% 10.6% 11.5% 10.9% 5.4% 13.6% 15.0% 10.3% 5.6% 10.8% 10.4%

COMPANY NAME Dairy Dairy Crest Group plc Dean Foods Co. Danone Glanbia plc Saputo, Inc. Median Mean Diversified Foods Associated British Foods plc Campbell Soup Co. ConAgra Foods, Inc. Del Monte Foods Co. Dole Food Company Inc. Fresh Del Monte Produce Inc. General Mills Inc. The Hain Celestial Group, Inc. Hershey Co. HJ Heinz Co. Hormel Foods Corp. The J. M. Smucker Company Kellogg Co. Kraft Foods Inc. McCormick & Co. Inc. Nestl S.A. Ralcorp Holdings Inc. Sara Lee Corp. Tootsie Roll Industries Inc. Treehouse Foods Inc. Unilever plc Median Mean Baked Goods/Snack Foods ARYZTA AG Diamond Foods, Inc. Flowers Foods, Inc. George Weston Limited Grupo Bimbo SA de CV J&J Snack Foods Corp. Lance, Inc. Tasty Baking Co. Median Mean

$735.5 $2,900.8 $36,875.6 $1,077.5 $6,069.3 $2,900.8 $9,531.8 $11,456.3 $11,793.2 $11,213.7 $2,768.3 $1,051.7 $1,282.2 $23,954.0 $692.9 $6,931.0 $14,673.4 $5,591.8 $7,101.1 $20,143.3 $43,404.8 $5,017.5 $178,070.6 $3,735.3 $9,221.0 $1,653.1 $1,529.3 $85,325.6 $7,101.1 $21,267.1 $2,984.1 $668.2 $2,359.0 $8,528.0 $9,255.4 $781.5 $691.2 $60.4 $1,570.2 $3,166.0

$1,346.6 $7,097.4 $46,440.4 $1,833.3 $6,540.2 $6,540.2 $12,651.6 $13,461.6 $14,330.2 $14,234.4 $4,357.5 $3,265.0 $1,580.5 $30,040.1 $901.2 $8,259.3 $18,994.3 $5,492.7 $7,885.6 $24,692.3 $60,236.8 $5,952.1 $198,973.7 $5,014.3 $10,729.0 $1,611.1 $1,927.4 $94,500.7 $8,259.3 $25,068.6 $3,946.9 $772.9 $2,591.7 $12,142.8 $11,824.6 $693.2 $802.3 $156.9 $1,697.0 $4,116.4

(1) As of 3-7-10 (2) Market Capitalization is the aggregate of a firms 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 Months Source: Capital IQ.

Food and Agribusiness Industry Insights Q4 2009

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Comparable Company Analysis

BEVERAGE
RECENT STOCK PRICE(1) $49.51 $55.51 $15.81 $16.39 $46.42 $42.81 % OF 52W HIGH 95.5% 99.9% 90.0% 99.4% 99.3% 83.4% 97.4% 94.6% $54.70 $6.98 $41.41 $11.65 $64.37 92.0% 71.7% 94.1% 80.3% 99.8% 92.0% 87.6%
MARKET CAP(2) (MM) ENTERPRISE VALUE (3) (MM)

MULTIPLES ENTERPRISE VALUE/ REVENUE EBITDA (4) 3.81x 3.74x 2.24x 3.70x 1.79x 2.95x 3.32x 3.04x 4.17x 0.52x 2.89x 0.72x 2.44x 2.44x 2.15x 11.4x 11.7x 11.6x 12.4x 11.3x 15.1x 11.6x 12.2x 13.2x 4.8x 9.6x 7.5x 11.0x 9.6x 9.2x TOTAL DEBT/ EBITDA 5.2x 1.3x 6.3x 3.2x 4.5x 2.9x 3.9x 3.9x 1.2x 1.6x 0.0x 0.0x 0.8x 0.8x 0.7x

OPERATING STATISTICS TTM REVENUE GROWTH (5) 59.4% -8.8% -10.8% 6.5% -12.7% -36.5% -9.8% -0.5% -3.0% -3.1% 10.6% 3.9% 0.0% 0.0% 1.7% TTM MARGINS GROSS EBITDA 52.8% 64.7% 34.2% 57.8% 43.3% 43.1% 48.0% 49.3% 64.2% 15.6% 53.6% 30.9% 53.5% 53.5% 43.6% 33.5% 32.0% 19.3% 29.9% 15.9% 19.5% 24.7% 25.0% 31.6% 10.8% 30.0% 9.7% 22.2% 22.2% 20.8%

COMPANY NAME Alcoholic Anheuser-Busch InBev Brown-Forman Corporation Constellation Brands Inc. Diageo plc Fortune Brands Inc. Molson Coors Brewing Company Median Mean Other Beverage The Coca-Cola Company Cott Corporation Hansen Natural Corporation National Beverage Corp. Pepsico, Inc. Median Mean

$78,762.4 $8,306.5 $3,509.4 $40,666.2 $7,054.8 $7,952.0 $8,129.2 $24,375.2 $126,090.3 $567.3 $3,650.7 $537.1 $101,054.5 $3,650.7 $46,380.0

$130,707.7 $8,980.4 $7,581.3 $52,969.1 $11,120.7 $8,937.7 $10,050.5 $36,716.1 $129,283.3 $828.7 $3,304.1 $426.9 $105,317.5 $3,304.1 $47,832.1

(1) As of 3-7-10 (2) Market Capitalization is the aggregate of a firms 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 Months Source: Capital IQ.

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Food and Agribusiness Industry Insights Q4 2009

Duff & Phelps Experience

Pacific Coast Producers Case Study
Duff & 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 Companys products are primarily marketed under store brands through the retail and foodservice channels.

Served as independent financial advisor to the Board of Directors of Pacific Coast Producers

> FINANCIAL ADVISOR

Representative Food and Agribusiness Transaction Experience

has been acquired by has been acquired by Olam International Limited Served as exclusive financial advisor to the Chapter 11 Trustee of SK Foods, LP has completed the spin-off of Kraft Served as a financial advisor to Altria Group Inc. with respect to the transaction Acted as financial advisor to the Shareholders Council of the Fonterra Co-Operative Group Limited Bolthouse Farms Acted as exclusive financial advisor to Mercer Ranches, Inc. and initiated structured and negotiated this transaction

> SELL SIDE ADVISOR

> FINANCIAL ADVISOR

> FINANCIAL ADVISOR

> SELL SIDE ADVISOR

a portfolio company Vestar 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

has completed the sale of its private label soup, infant feeding and food service group businesses to TreeHouse 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

has been acquired by Foster Farms Dairy

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

> SOLVENCY OPINION

> FAIRNESS OPINION

> FAIRNESS OPINION

> SELL SIDE ADVISOR

Food and Agribusiness Industry Insights Q4 2009

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Contacts
H. Glen Clarke Managing Director +1 312 697 4680 glen.clarke@duffandphelps.com David N. Rowe Director +1 312 697 4685 david.rowe@duffandphelps.com Leslie A. Nolan Vice President +1 312 697 4546 leslie.nolan@duffandphelps.com Farzad Mukhi Senior Associate +1 310 689 0142 farzad.mukhi@duffandphelps.com Eric Holter Analyst +1 312 697 4544 eric.holter@duffandphelps.com

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About Duff & Phelps As a leading global independent provider of financial advisory and investment banking services, Duff & Phelps delivers trusted advice to our clients principally in the areas of valuation, transactions, financial restructuring, dispute and taxation. Our world class capabilities and resources, combined with an agile and responsive delivery, distinguish our clients experience in working with us. With more than 1,200 employees serving clients worldwide through offices in North America, Europe and Asia, Duff & Phelps is committed to fulfilling its mission to protect, recover and maximize value for its clients. Investment banking services in North America are provided by Duff & Phelps Securities, LLC. Investment banking services in Europe are provided by Duff & Phelps Securities Ltd. Duff & Phelps Securities Ltd. is authorized and regulated by the Financial Services Authority. Investment Banking services in France are provided by Duff & Phelps SAS. (NYSE: DUF)

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