M&A and Capital Markets Update - Food and beverage Q3 2012

Due to inclement weather and drought conditions, economic and energy policies, and global effects, the food and beverage industry has faced somewhat of a roller coaster ride over the past few years. Currently, crop prices are trending higher than normal and average protein prices are increasing after a recent short-lived slump. From an M&A perspective, the food and beverage industry is experiencing trends consistent with the overall market. Corporate buyers are flush with cash as the top food and beverage companies on the S&P 500 have over $30 billion of cash and short-term investments. Coupled with a desire for shareholder returns, these companies, and likewise, smaller private companies, remain acquisitive. The private equity industry continues to have significant raised equity to invest and favorably views food and beverage companies. Valuations remain at a premium for food and beverage companies compared to the S&P 500, trading at a 30 percent premium in total enterprise value to EBITDA.

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