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Acquisition Summary

By Xuanjing Zhang

Organic Food Market Overview and Trends

The size of organic food market: over $39 billion

Consumer demand for organically produced goods continues to show double-digit growth

CAGR: 11.27%

Hain Celestial– Company ProfileType: (NASDAQ: HAIN) Stock Price: $42.21

Headquarters: Lake Success, New York Phone: 1-800-434-4246

Sector: Service Employees: 6,307 Website: http://www.hain-celestial.comBusiness Description

The Hain Celestial Group, Inc. manufactures, markets, distributes, and sells organic and natural products in the United States, the United Kingdom, Canada, and Europe. Its grocery products include infant formula; infant, toddler, and kids foods; diapers and wipes; rice and grain-based products; flour and baking mixes; breads, hot and cold cereals, pasta, condiments, cooking and culinary oils, granolas, granola bars, and cereal bars; canned, chilled fresh, aseptic, and instant soups; Greek-style yogurt; chilies and packaged grains; and chocolates and nut butters, as well as plant-based beverages and frozen desserts, such as soy, rice, almond, and coconut. The company’s grocery products also comprise juices, hot-eating, chilled and frozen desserts, cookies, crackers, gluten-free frozen entrees and bars, frozen pastas and ethnic meals, frozen fruits and vegetables, cut fresh fruits, refrigerated and frozen soy protein meat-alternative products, tofu, seitan and tempeh products, jams, fruit spreads and jelly, honey, marmalade, and other food products. In addition, it provides snack products, such as potato, root vegetable, and other vegetable chips, as well as straws, tortilla chips, whole grain chips, pita chips, puffs, and popcorn; specialty teas, including herbal, green, black, wellness, rooibos, and chai tea lattes; ready-to-drink beverages comprising organic kombucha and chai tea lattes; personal care products consisting of skin, hair and oral care, deodorants, baby care items, acne treatment, body washes, and sunscreens; and poultry and protein products, such as turkey and chicken products. The company sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, and drug and convenience stores in approximately 70 countries worldwide.

Key ExecutivesMr. Irwin David Simon Founder, Chairman, Chief Executive Officer and Presi-

dent

Ms. Denise M. Faltischek Chief Compliance Officer, Exec. VP, Gen. Counsel and Corp Sec.

Mr. John Carroll Exec. VP and Chief Exec. Officer of Hain Celestial North America

Mr. Pasquale Conte Chief Financial Officer and Exec. VP

Mr. Gerald F. Amantea Ph.D.

VP of Technical Service

Brands

Hain Celestial– Company Profile Major Direct

Holders  

Holder Shares Reported

SIMON IRWIN D 1,743,773 8-Feb-16

CARROLL JOHN 245,189 7-Mar-16

HEYER ANDREW R 127,010 19-Nov-15

FUTTERMAN JACK 120,150 20-Nov-14

ZILAVY LAWRENCE S 52,930 19-Nov-15Top Institutional Holders      Holder Shares % Out Value*Vanguard Group, Inc. (The) 7,046,356 6.83 284,602,311Jennison Associates LLC 5,569,925 5.4 224,969,265Coatue Management, LLC 4,037,633 3.92 163,079,992BlackRock Fund Advisors 3,465,833 3.36 139,984,991Waddell & Reed Financial Inc. 3,170,681 3.08 128,063,802BlackRock Institutional Trust Company, N.A. 3,043,084 2.95 122,910,159FMR, LLC 2,930,261 2.84 118,353,238Bank of America Corporation 2,659,380 2.58 107,412,355State Street Corporation 2,633,945 2.55 106,385,035Goldman Sachs Group, Inc. 2,484,500 2.41 100,348,952

Top Mutual Fund Holders      Holder Shares % Out Value*Prudential Jennison Mid-Cap Growth Fd 4,081,069 3.96 148,469,294Vanguard Small-Cap Index Fund 2,057,268 2 83,093,052Vanguard Total Stock Market Index Fund 1,873,422 1.82 75,667,512iShares Core S&P Midcap ETF 1,847,998 1.79 67,230,169Ivy Mid Cap Growth Fund 1,463,852 1.42 59,124,980Vanguard Small-Cap Growth Index Fund 1,263,872 1.23 51,047,788Victory Portfolios-Victory Munder Mid Cap Core Growth Fund 1,186,000 1.15 47,902,538Vanguard Extended Market Index Fund 1,077,817 1.05 43,533,027SPDR S&P Mid Cap 400 ETF Trust 1,034,453 1 41,781,555Fidelity Blue Chip Growth Fund 944,971 0.92 34,378,045

Valuation Measures  Market Cap (intraday): 4.35B

Enterprise Value (Apr 16, 2016): 5.13B

Enterprise Value/Revenue (ttm): 1.83

Enterprise Value/EBITDA (ttm): 14.33

Revenue (ttm): 2.80B

EBITDA (ttm): 357.95M

Shares Outstanding: 103.10M

Sale in 6 years: CAGR 24.15%

Hain Celestial– Company Profile

WhiteWave– Company ProfileType: (NYSE: WWAV) Stock Price: $39.92

Headquarters: Denver, Colorado Phone: 1-303-635-4500

Sector: Consumer Goods Employees: 5,300 Website: http://www.whitewave.comBusiness Description

The WhiteWave Foods Company, a consumer packaged food and beverage company, manufactures, markets, distributes, and sells branded plant-based foods and beverages, coffee creamers and beverages, dairy products and organic salads, and fruits and vegetables in North America and Europe. It operates through three segments: Americas Foods & Beverages, Americas Fresh Foods, and Europe Foods & Beverages. The Americas Foods & Beverages segment offers plant-based foods and beverages, such as soymilk, almond milk, coconut and cashew milk, ice cream and frozen novelty products, plant-based yogurts, and Vega plant-based nutritional products under the Silk and So Delicious brands; dairy products, including Horizon Organic milk, yogurt, cheese, and other dairy products, as well as Horizon branded macaroni and cheese, and snack foods; and coffee creamers and ready-to-drink beverages under the International Delight, Dunkin Donuts, and LAND O LAKES brand names. The Americas Fresh Foods segment provides packaged salads and greens, fresh and frozen fruits and vegetables, dried fruits, and produce-based snacks under the Earthbound Farm brand. The Europe Foods & Beverages segment offers beverages using soy, almond, coconut, hazelnut, rice, oat, and other plant-based ingredients under the Alpro and Provamel brands; and plant-based alternatives to yogurt, culinary creams, desserts, and margarine. The company sells its products to grocery stores, mass merchandisers, club stores, convenience stores, and health food stores, as well as various away-from-home channels, including restaurants and foodservice outlets. It markets its products through direct sales force, independent brokers, regional brokers, and distributors, as well as through a network of partners.

Key Executives

Mr. Gregg L. Engles Chairman, Chief Exec. Officer and Chairman of Exec. Committee

Mr. Blaine E. McPeak Chief Operating Officer

Mr. Bernard P.J. Derychere Exec. VP and President of Europe Food & Beverage

Mr. Kevin C. Yost US Group President for Americas Food & Beverage

Mr. Gregory Stephen Chriten-son

Chief Financial Officer and Exec. VP

Brands• North America: Silk®, So Delicious® and

Vega™ plant-based foods and beverages, International Delight® and LAND O LAKES® coffee creamers and beverages, Horizon Organic® and Wallaby Organic® premium dairy products and Earthbound Farm® organic salads, fruits and vegetables

• Europe: Alpro® and Provamel®

• China: Silk® ZhiPuMoFang brand.

WhiteWave– Company ProfileMajor Direct Holders     Holder Shares ReportedENGLES GREGG L 2,136,091 1-Apr-16HAECKER KELLY J 300,239 1-Mar-16HARDIN JOSEPH S JR 188,320 17-Feb-16ZANETICH THOMAS N 167,939 8-Mar-16MCPEAK BLAINE E 149,273 17-Feb-16

Top Institutional Holders      Holder Shares % Out Value*Vanguard Group, Inc. (The) 12,438,275 7.03 483,973,280Price (T.Rowe) Associates Inc 7,878,992 4.45 306,571,578Artisan Partners Limited Partnership 6,849,965 3.87 266,532,138BlackRock Fund Advisors 6,068,284 3.43 236,116,930State Street Corporation 5,371,428 3.04 209,002,263BlackRock Institutional Trust Company, N.A. 5,202,922 2.94 202,445,695Deutsche Bank Aktiengesellschaft 5,065,540 2.86 197,100,161American Century Companies, Inc. 4,650,841 2.63 180,964,223Times Square Capital Management, LLC 3,620,930 2.05 140,890,386Citadel Advisors LLC 3,488,235 1.97 135,727,223

Top Mutual Fund Holders      Holder Shares % Out Value*Price (T.Rowe) Mid Cap Growth Fund 4,500,000 2.54 175,095,000Artisan Mid-Cap Fund 3,957,975 2.24 154,004,807Vanguard Total Stock Market Index Fund 3,222,132 1.82 125,373,156iShares Core S&P Midcap ETF 3,162,283 1.79 119,376,183Vanguard Mid-Cap Index Fund 1,886,822 1.07 73,416,244Vanguard Extended Market Index Fund 1,829,201 1.03 71,174,210SPDR S&P Mid Cap 400 ETF Trust 1,770,288 1 68,881,906Vanguard Small-Cap Index Fund 1,760,409 1 68,497,514Victory Portfolios-Victory Munder Mid Cap Core Growth Fund 1,506,200 0.85 58,606,242Deutsch Investment Tr-Deutsche Core Equity Fd 1,228,757 0.69 50,354,461

Valuation Measures  Market Cap (intraday): 7.06BEnterprise Value (Apr 16, 2016): 8.96BEnterprise Value/Revenue (ttm): 2.32Enterprise Value/EBITDA (ttm): 19.82Revenue (ttm): 3.87BRevenue Per Share (ttm): 22.03EBITDA (ttm)6: 452.23MShares Outstanding: 176.86M

Sale in 5 years: CAGR: 18.81%

WhiteWave– Company Profile

Sales by Geography

United StatesIn-ter-na-tional

Country Sales %

United States 82%

International 18%

Hain Celestial– Recent Acquisitions

WhiteWave– Recent Acquisitions

Summary of Acquisition

Transaction Summary      

Transaction Date  

    Acquirer Target

Companies Hain Celestial WhiteWave

Fully Diluted Shares Outstanding (FDSO) 102.6 176.34

Current Share Price   $41.17 $38.79

   

Offer Price for Target - WhiteWave $46.55

Premium for Target Current Share Price 20%

   

Target Equity Value Offered - WhiteWave $8,208.46

Target Implied Transaction Value - WhiteWave $10,300.26

Scenario Analysis- All Equity Consideration for Target Equity - WhiteWave Percentage Per Share TotalCash Component 0.00% $0.00 $0.00 Equity Component (Acquirer Shares Issued) - Hain Celestial 100.00% $46.55 $8,208.46 Total 100.00% $46.55 $8,208.46    Cash Component Sources      Cash from Balance Sheet $177.1 Interest Rate earned on Cash 4.50%New Debt ($177.1)Interest Rate on New Debt 7.00%   Equity Component Sources      Exchange Ratio 1.13xAcquirer Shares Issued - Hain Celestial 199.4 Pro-forma Shares Outstanding - Combined 302.0    Pro-forma Ownership      Acquirer Shareholders - Hain Celestial 33.98%Target Shareholders - WhiteWave 66.02%

1. Acquirer shares to issue is computed by Equity component/current share price of Hain.

2. Exchange ratio= # of shares outstanding of WhiteWave/Acquirer shares issued- Hain. This ratio means the relative number of new shares that will be given to existing shareholders of WhiteWave

3. Acquirer shareholders ratio of Hain= Current # shares outstanding- Hain/Pro-forma shares outstanding

Scenario Analysis- All Equity

1. In this analysis, synergies is not considered.

2. The calculation of goodwill and annual depreciation of write-ups is on next page.

Accretion/Dilution Results

FYE December 31 2015A 2016P 2017PRevenue      Hain Celestial $2,800.70 $3,506.71 $4,390.68 WhiteWave $3,866.30 $4,274.80 $4,615.90 Combined $6,667.00 $7,781.51 $9,006.58        EBITDA      Hain Celestial $381.20 $469.90 $588.35 WhiteWave $488.70 $575.50 $654.20 Combined $869.90 $1,045.40 $1,242.55        Net Income      Hain Celestial $195.99 $248.32 $311.94 WhiteWave $188.69 $239.83 $280.39 Combined $384.68 $488.15 $592.32        Standalone EPS      Hain Celestial $1.91 $2.42 $3.04 WhiteWave $1.07 $1.36 $1.59        Pro-forma EPS      Combined Net Income $384.68 $488.15 $592.32 Plus: Expected Post-Tax Synergies $0.00 $0.00 $0.00 Less: Amortization of Intangibles ($21.26) ($21.26) ($21.26) Less: Depreciation of PP&E ($34.83) ($34.83) ($34.83) Less: Additional Net Interest Expense $14.77 $14.77 $14.77        Proforma Net Income $343.35 $446.82 $551.00 Proforma Shares Outstanding 302.0 302.0 302.0 Earnings Per Share $1.14 $1.48 $1.82        % - EPS Accretion (Dilution) (40.5%) (38.9%) (40.0%)$ - EPS Accretion (Dilution) ($0.77) ($0.94) ($1.22)Accretive / Dilutive Dilutive Dilutive Dilutive

Scenario Analysis- All Equity

Calculation of Goodwill and Annual Depreciation of Write-Ups

Book Value of Target Equity - Exisiting Goodwill (Net Identifable Assets) $6,793.16

Goodwill $1,211.97

   

Gross Intangible Assets - WhiteWave $1,062.80

Intangible Write-Up % 10%

Intangible Write-Up Amount $106.28

Amortization Period (Years) 5

Yearly Amortization of Intangibles $21.26

   

Gross PP&E - WhiteWave $1,741.70

PP&E Write-UP % 10%

PP&E Write-UP Amount $174.17

Depreciation Period (Years) 5

Yearly Depreciation of PP&E $34.83

Deferred Tax Liability 77.12

Scenario Analysis- All Cash

1. Acquirer shares to issue is computed by Equity component/current share price of Hain.

2. Exchange ratio= # of shares outstanding of WhiteWave/Acquirer shares issued- Hain. This ratio means the relative number of new shares that will be given to existing shareholders of WhiteWave

3. Acquirer shareholders ratio of Hain= Current # shares outstanding- Hain/Pro-forma shares outstanding

Consideration for Target Equity - WhiteWave Percentage Per Share TotalCash Component 100.00% $46.55 $8,208.46 Equity Component (Acquirer Shares Issued) - Hain Celestial 0.00% $0.00 $0.00 Total 100.00% $46.55 $8,208.46    Cash Component Sources      Cash from Balance Sheet $177.1 Interest Rate earned on Cash 4.50%New Debt $8,031.4 Interest Rate on New Debt 7.00%   Equity Component Sources      Exchange Ratio 0.00xAcquirer Shares Issued - Hain Celestial 0.0 Pro-forma Shares Outstanding - Combined 102.6    Pro-forma Ownership      Acquirer Shareholders - Hain Celestial 100.00%Target Shareholders - WhiteWave 0.00%

Scenario Analysis- All Cash

1. In this analysis, synergies is not considered.

2. The calculation of goodwill and annual depreciation of write-ups is on next page.

Accretion/Dilution Results

FYE December 31 2015A 2016P 2017PRevenue      Hain Celestial $2,800.70 $3,506.71 $4,390.68 WhiteWave $3,866.30 $4,274.80 $4,615.90 Combined $6,667.00 $7,781.51 $9,006.58        EBITDA      Hain Celestial $381.20 $469.90 $588.35 WhiteWave $488.70 $575.50 $654.20 Combined $869.90 $1,045.40 $1,242.55        Net Income      Hain Celestial $195.99 $248.32 $311.94 WhiteWave $188.69 $239.83 $280.39 Combined $384.68 $488.15 $592.32        Standalone EPS      Hain Celestial $1.91 $2.42 $3.04 WhiteWave $1.07 $1.36 $1.59        Pro-forma EPS      Combined Net Income $384.68 $488.15 $592.32 Plus: Expected Post-Tax Synergies $0.00 $0.00 $0.00 Less: Amortization of Intangibles ($10.63) ($10.63) ($10.63) Less: Depreciation of PP&E ($17.42) ($17.42) ($17.42) Less: Additional Net Interest Expense ($401.81) ($401.81) ($401.81)       Proforma Net Income ($45.18) $58.29 $162.47 Proforma Shares Outstanding 102.6 102.6 102.6 Earnings Per Share ($0.44) $0.57 $1.58        % - EPS Accretion (Dilution) (123.1%) (76.5%) (47.9%)$ - EPS Accretion (Dilution) ($2.35) ($1.85) ($1.46)Accretive / Dilutive Dilutive Dilutive Dilutive

Scenario Analysis- All Cash

Calculation of Goodwill and Annual Depreciation of Write-Ups

Book Value of Target Equity - Exisiting Goodwill (Net Identifable Assets) $6,793.16

Goodwill $1,218.99

   

Gross Intangible Assets - WhiteWave $1,062.80

Intangible Write-Up % 10%

Intangible Write-Up Amount $106.28

Amortization Period (Years) 10

Yearly Amortization of Intangibles $10.63

   

Gross PP&E - WhiteWave $1,741.70

PP&E Write-UP % 10%

PP&E Write-UP Amount $174.17

Depreciation Period (Years) 10

Yearly Depreciation of PP&E $17.42

Deferred Tax Liability 84.14

Synergy Analysis- All Equity

First, we should calculate the breakeven pretax synergies:

1. Breakeven pretax synergies= (Combined EPS-Hain standalone EPS)* Combined Pro-forma shares outstanding/ (1-Effective tax rate)

2. For effective tax, I use the average of effective tax rate of Hain and WhiteWave. Thain= 22.2%, TWhiteWave=32.8%

Breakeven Pretax Synergies $391.72 $506.28

% of Revenue 5.03% 5.62%

% of EBITDA 37.47% 40.74%

Synergies 2016P 2017P

Expected Pre-tax Annual Synergies $0.00 $0.0

Effective Tax Rate 27.5% 27.5%

Expected Post-Tax Annual Synergies $0.0 $0.0

Synergy Analysis- All Equity

1. The breakeven analysis shows that the total synergies of 2016P and 2017P are $391.72 million and $506.28 million.

2. The total executive compensation as reported last year is around $21 million. This amount is quite small compared with what we need to eliminate dilution.

3. The most likely synergy should be revenue increase and operating expense margin improvement.

4. After acquisition, WhiteWave can utilize the international business channel of Hain. So WhiteWave can expand their business much beyond their current foreign market- Canada.

5. So this acquisition can both increase revenues of Hain and WhiteWave, in the meanwhile reducing the operating cost of two firms.

Source of Synergies

Hain Celestial impact WhiteWave impact

More international distribution channel

Unique product: Plant based food and beverage

Much higher growth in revenue and profit

Reduced executive compensation

Global expansion: China and South Africa

Talent pool of food experts reduces Hain’s dependence on one personnel

Research & Development on new product

Own direct sale force

Recommendations

1. For Hain Celestial, I would not recommend to acquire WhiteWave by using all equity because Hain will only have 33.98% shares of combined firm and will loss control of this combined firm.

2. I would not recommend to use all cash Although the synergies required is much less than former two methods, only $262.11M in 2016P, the pressure of new debt payment is quite uncomfortable.

3. So, I would recommend to use 50-50 cash-equity method, the synergies required to eliminate dilution are slightly less than all equity method’s (in 2016P, from $391.72M to $352.75M). Also, Hain can have 50.82% ownership of combined firm.

Questions?

Thank you!