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March 2015

M&A in Retail & Consumer in FranceWhat happened in 2014?What are the 2015 prospects?

Contents

2014 M&A overview in the French Retail & Consumer landscape 1

In food and agribusiness 3

In the retail industry 6

In luxury and cosmetics 9

In the wine and spirits industry 11

Private equity activity 12

Financing opportunities 14

Conclusion 2015 prospects 16

PwC | 1

Despite a difficult economic context in France, the Retail & Consumer market for mergers and acquisitions is brighter this year, recording its highest value since 2008.

The number of transactions remained stagnant with 266 operations in 2014 but increased in value by 32% to reach €18bn.

When adding two exceptionally large and noteworthy operations of the year 2014, M&A value exceeds 2006 level: the final resolution of the long-running LVMH / Hermès saga, which saw Bernard Arnault relinquish his $7.5bn Hermès stake, and Nestlé selling €6bn of its stake in L’Oréal back to the company.

France retail & Consumer Goods deals from 2005 to 2014

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FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13* FY14*

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Value LVMH/Hermes L'Oreal/Nestle Volume

2014 M&A activity features the following major trends.

French major R&C groups invested and expanded internationally

L’Oréal multiplied its acquisitions in cosmetics producers (Decleor, Magic Holdings…), Essilor expanded in online distribution with the acquisition of Coastal.com, Danone pushed further into China’s dairy market with its investment in Yashili.

Restructuring continued in the wake of the difficulties experienced in 2013

Vivarte was acquired by Oaktree through a debt to equity swap leading to a 2bn€ reduction of its debt, LGam fund took over the control of Jardiland to impulse a new dynamic, Brandt was reinvigorated following its acquisition by Cevital, the Doux group was able to overcome its short-term financial difficulties following the support of the Saudi group Almunajem, DIA group disposed of its troublesome activity in France taken over by Carrefour. The store networks Mobilier Européen Group –Fly, Atlas, Crozatier- were restructured and taken over separately. The famous luxury brand Hediard was taken over by the Austrian Group Do&Co.

2014 M&A overview in the French Retail & Consumer landscape

2 | M&A in Retail & Consumer in France

France Retail & Consumer − 2014 Top 15 Largest transactions (“known deal value”)

Target Deal type Business Corporate / PE buyer Deal

value (€m)

VIVARTE SA FR Debt restructuring Clothing retailer OAKTREE, ALCENTRA, GOLDEN

TREE , BABSON US 2 000

TRANSITIONS OPTICAL, INC US 51% Eyeglasses lences manufacturer ESSILOR INTERNATIONAL SA FR 1 399

DIANA SAS FR 100% Vegetable extract-based nutritional products SYMRISE AG DE 1 300

CARREFOUR SA FR 6% Supermarket chain HOLDING MOTIER (FAMILY MOULIN) FR 1 300

SPOTLESS GROUP SAS FR 100% Cleaning products HENKEL AG & CO KGAA TS GE 940

BRASIL FOODS (MILK ACTIVITIES) BR 100% Food processing company LACTALIS FR 618

DIA SAS (FRANCE) FR 100% Convenience supermarket operator CARREFOUR SA FR 600

MAGIC HOLDINGS INTERNATIONAL LIMITED HK 100% Cosmetics producer L'OREAL SA FR 549

ADA COSMETICS INTERNATIONAL GMBH GE LBO bis Cosmetics producer ARDIAN FR 500

YASHILI CN 25% Dairy products producer DANONE SA FR 437

MENGNIU CN from 4% to 10% Dairy products producer DANONE SA FR 486

NOCIBE FRANCE DISTRIBUTION SAS FR 100% Cosmetics retailer AI PERFUME SAS (DOUGLAS) DE 385

DB APPAREL SAS FR 100% Intimates and underware manufacturer HANESBRANDS INC. US 400

DESIGUAL SP 10% Clothing retailer EURAZEO SA FR 285

COASTAL CONTACTS INC. CA 100% Online optical products retailer ESSILOR INTERNATIONAL SA FR 282

PwC Analysis - Sources: Zephyr, Merger Market, Capital Finance

Portfolio realignements intensified

In the French sector with businesses selling secondary brands and activities to get critical mass and funding for their core business. Chanel announced an historical decision to sell Bourjois to Coty as part of its strategy to recenter on its core luxury brands, the French cooperative Terrena allowed the Irish Dawn Meats to enter 49% in Elivia, Terrena’s beef activity, Fournier Mobalpa acquired the kitchen manufacter Hygena

A few highlights from our last Global CEO survey linked to M&A issues

CEO Retailers expect cross sector movements into adjacent industries, especially wholesale distribution, consumer products manufacturing… they are planning to form new alliances in order to access new customers, markets or technologies.

Consumer goods CEOs are equally targeting retail wholesale sector, they explore the potential in agriculture, healthcare, pharma and life sciences. They have invested in digital and analytics and place priority to manage sourcing and supply chain efficiently. They are keen to form new alliances with suppliers, customers and business networks to access new geographic markets and customers and stimulate their innovation capability.

CEOs from both Retail and Consumer goods sectors are concerned by the fast disruptive potential of new distribution channels and digital technology.

PwC | 3

M&A serves as a key driver to address megatrends that are shaping the world of tomorrow: population growth (especially in Africa and Asia), the economic empowerment of the emerging countries, faster urbanization, climate change, scarcity of natural resources, and, lastly, technology. Production and consumption zones are shifting, concentrations movements continued in the trend of past years.

Restructuring continues in meat

In the meat industry, pork and poultry, restructuring continued in the wake of the difficulties experienced in 2013.

In poultry, Doux continued its recovery and the Saudi family group Almunajem, exclusive importer and distributor in Saudi Arabia of Doux for 40 years, entered the capital after conversion of its debt in capital. Almunajem holds a 25% stake alongside D & P, the family holding company of the president Didier Calmels who owns the majority with 52.5%, and the Doux family (22.5%).

On their side, French poultry group LDC and French diversified agricultural group Sofiprotéol (renamed Avril in 2015 following its reorganization) are forming an alliance to help the two companies become stronger in the competitive

European markets. The companies sought to capitalize on their expertise, excellence and capacity for innovation. The objectives of the two partners included reconquering the domestic poultry market, reinforcing LDC’s position in the European poultry industry, and reinforcing the position of Sofiprotéol’s Sanders Division in the fields of animal nutrition and production.

Should also be noted the entry of Irish Dawn Meats in the capital of Elivia, bovine branch of Terrena with 49%, stake that could become a majority with an option to increase to 70% in 2019, a reshuffle of the shareholdings in Labeyrie Fine Foods, with the entry of the fund PAI Partners at parity with Lur Berri, in their 86% controlling stake, with the remainder hands on management.

M&A in food and agribusiness The food industry is hungry again


Opening new markets for milk

April 2015 will be a significant month for Europe’s dairy industry as milk quotas come to an end, after constraining production for more than 30 years. For many countries in the EU, the end also marks a period of potential expansion as they look to develop their milk production to take advantage of growing global demand for dairy products. Many have already started restructuring their industries leading the European Commission to predict increases of almost 2% post-quota. According to analysts, the rise in dairy exports to developing nations – particularly in Asia and Africa – points to the reason why EU dairy industries are looking to expand.

France’s dairy industry has already begun restructuring and continued very actively to develop internationally in 2014.

Lactalis, the world leader in dairy products has finalized the acquisition of 100% of the capital of the Indian dairy group Tirumala Milk Products, second largest producer of South India for an undisclosed price estimated around $275m. Lactalis also announced that it had signed the contract for the acquisition of the dairy division of Brasil Foods (BRF), one of the Brazil’s top companies in the food sector. This purchase is likely to make Lactalis the second largest dairy company in Brazil, surpassing Danone and trailing only Nestlé.

French food group Danone bought a 40% stake in the Kenyan group Brookside, East Africa’s top dairy producer with sales of €130m, as part of plans to expand in new markets while growth is weak in Europe and the economy slows in China. The deal gives Danone access to the largest milk collection network in East Africa. Danone, which generates 60% of its turnover in emerging countries, has invested more than a billion euros in Africa over the past two years.

Other territory of interest for milk: China.

China is Danone’s fourth-largest market, accounting for around 7% of its group sales. Danone is pushing further into China’s dairy market with a $550m investment in Yashili, the infant milk formula provider, in a deal that also ties it more closely with the country’s biggest milk producer China Mengniu Dairy.

The deal strengthens Danone’s ties with China’s top dairy firm and comes as Danone’s key baby nutrition brand in China Dumex seeks to win back consumers’ confidence after accusations of high prices, bribery and tainted milk scares last year.

Investing in emerging countries

Other French groups are investing in emerging countries to find new sources of revenues and seize opportunities.

Vilmorin group, number four in the world of seeds, continues its expansion in Asia with the full takeover of Seed Asia based in Bangkok, Thailand. Seed Asia specializes in creation, production and distribution of hybrid tropical corn. Vilmorin & Cie thus gains access also to genetic resources of tropical corn, well-suited to other zones including India, Brazil, southern China and Africa.

The French group Tereos, the world’s fourth largest sugar producer and number three for starch in Europe, is establishing its presence in Indonesia with the acquisition of 50% of Redwood Indonesia, the country’s only corn starch facility in joint venture with the FKS group.

The world leader in yeast, Lesaffre got hold of a big industrial unit in Turkey. This project focused on the yeast plant Dosu Maya, property of the Turkish leading food group, Yildiz. The operation was carried out at a price of $220m.

PwC | 5

Main deals - Food industry - France (closed in 2014)

Target Deal type Business Corporate / PE buyer Deal value

(€m)

DIANA SAS FR 100% Vegetable extract-based nutritional products

SYMRISE AG DE 1 300

BRASIL FOODS (MILK ACTIVITIES) BR 100% Food processing company GROUPE LACTALIS SA FR 618

YASHILI CN 25% Dairy products producer DANONE SA FR 437

MENGNIU CN from 4% to 10%

Dairy products producer DANONE SA FR 486

CENTRALE LAITIERE MO 22% Dairy products producer DANONE SA FR 278

LABEYRIE FINE FOODS FR LBO bis Seafood, frozen and fresh caterer PAI PARTNERS FR 250

TIRUMALA MILK PRODUCTS PVT LTD

IN 100% Dairy products manufacturer GROUPE LACTALIS SA FR 202

BISCUITS POULT FR LBO bis Biscuit manufacturer QUALIUM INVESTISSEMENT FR <170

DOSU MAYA MAYACILIK A.S TK 100% Flour yeast producer LESAFFRE ET COMPAGNIE, SA FR 163

DGF FR LBO bis Bakery product manufacturer 21 CENTRALE PARTNERS FR 80

AGRIAL ENTREPRISE FR Development Agribusiness cooperative UNIGRAINS, CRÉDIT AGRICOLE

FR 50

KERRY GROUP PLC (FOOD BUSINESS IN FRANCE)

FR 100% Food processing company SOLINA GROUP SAS FR 20

BROOKSIDE DAIRY LTD KE n.c Dairy products producer DANONE SA FR n/c

ELIVIA FR 49% Meat producer cooperative DAWN MEATS IRL n/c

GROUPE DOUX FR 25% Poultry products producer AL MUNAJEM A.SA n/c

SOFIPROTÉOL ASSETS FR 50% LDC FR n/c

SEED ASIA CO., LTD TH n.c Hybrid tropical corn producer VILMORIN & CIE SA FR n/c

REDWOOD INDONESIA INDS 50% TEREOS FR n/c


Foreign companies to acquire French “nuggets”

The Breton group Diana, world leader for pet food solutions, will enter the fold of Symrise, the world number four group in flavors and fragrances for cosmetics and food for a price of €1.3bn, a highly competitive market that is growing globally.

With the Breton company, Symrise will make its entry into the sector of ‘pet food’, estimated at nearly $75bn worldwide. Present in 23 countries (Europe, US, Asia), with 2,000 employees, Diana will benefit from Symrise network, strong presence in emerging countries. The new group is expected to generate pro forma sales of nearly €2.3bn.


2014 was another challenging year for French retailers.

Although growth recovered modestly and accelerated slightly, it remained overall poor. Continued weak economy left many customers financially constrained and expected new regulations linked to the new Macron law is bringing uncertainty among players.

Result was a strong pressure on retail sales and margins, especially for non-grocery specialists.

Physical network expansion and concentration in the grocery retail

In grocery retail, 2014 was again a year of intensive competition in a context of physical and virtual expansion still suffering from stagnating consumption, leading to market concentration and an intensified price war between players.

In the physical area, grocery retailers drove sales and channel shares with the extension of their average selling space per outlet, new openings and acquisitions with a particular focus in the growing proximity segment.

This fierce competition and resulting price war led to an unprecedented move towards concentration to gain purchasing synergies as demonstrated recently through the bilateral purchasing cooperation agreements which have been signed between leading French retailers (Auchan with SystemeU, Carrefour with Cora, Casino with Intermarché) or through Carrefour’s acquisition for €600m of the French unit of the Spanish low-cost supermarket chain Distribuidor Internacional de Alimentacion SA (DIA France). This transaction, in line with Carrefour’s multi-format and multi-channel expansion strategy on its domestic market, aimed at increasing and reinforcing the Group presence, especially in the proximity segment, securing its leading position as number one retailer in France.

Internationalization as growth strategy

International expansion, both to reinforce their existing positions in mature markets or tocapture additional growth in emerging countries, remained an important growth strategy lever for French players with an international presence.

Casino acquired through its Colombian subsidiary, Exito, the independent discounter Super Inter. Carrefour acquired 53 supermarkets in North Italy under the Billa banner from the Rewe Group and 16 stores of the “Il Centro” chain to strengthen its presence in the difficult Italian market.

Restructuring in specialized retail

Dynamics were different in the various segments of the specialized retail in France but overall 2014 was again a difficult year for most players, facing strong pressure on their margins despite strong networks and brands portfolio, active category management and business model optimization initiatives.

In this context, specialized retail players have accounted for more than 80% of the deals in volume, especially in the Fashion & Apparel and Home & DIY being the most active segments in volume.

M&A in the retail industryTime to shop


PwC | 7

Fashion & apparel retail, accounted for nearly half of the retail deals in France.

Like the acquisition of 10% of the Spanish clothing manufacturer and retailer Desigual by Eurazeo, for the comfortable sum of €285m, a number of other deals in the Fashion & Apparel in France were targets of private equity funds. As an example, the €3bn revenues shoes and clothing retailer Vivarte was acquired by turn around funds led by Oaktree through a debt to equity swap with a €2bn reduction of its debt and the set-up of a new management team with the aim to redynamise the group and its 16 brands active in Southern Europe.

Only a few pure player M&A operations took place such as the investment by BPI France and HLD in Sarenza for €74m, the French e-commerce company specializing in the online sale of shoes and accessories fund raising stake by the French menswear e-commerce leading site Menlook.com.

In Perfumes and cosmetics, the German cosmetics retailer Douglas, owned by the Kreke family and the private equity firm Advent, acquired the French perfumery chain Nocibe from Charterhouse Capital. With a combined 625 stores and 4,000 employees, this acquisition makes new Douglas group the second largest perfume seller in France, behind LVMH’s Sephora and ahead of Marionnaud.

Finally, another well represented sector in 2014 was the Home and DIY retail segment with the acquisition of Jardiland by LGam, the investment fund related to the Lichtenstein prince family. Following ongoing financial difficulties of Mobilier Européen’s (Fly, Atlas, Crozatier) to compete against the market leader Ikea, the group was dismantled. Conforama (owned by Steinhoff) acquired Fly Switzerland and 10 stores in France, the rest was sold to its former manager Nicolas Finck and a few stores to BUT. In a similar context, Hygena kitchen furniture manufacturer suffering on the French market was acquired by the Fournier Mobalpa Group, allowing the latter to reinforce its position and expand its distribution network.

PwC | 7


Main deals - Retail - France (closed in 2014)

Target Deal type Business Corporate / PE buyer Deal

value (€m)

VIVARTE SA FR Debt

restructuringClothing retailer

OAKTREE, ALCENTRA, GOLDEN TREE , BABSON

US 2 000

CARREFOUR SA FR 6% Supermarket chain HOLDING MOTIER (FAMILY MOULIN)

FR 1 300

DIA SAS (FRANCE) FR 100% Convenience supermarket operator

CARREFOUR SA FR 600

NOCIBE FRANCE DISTRIBUTION SAS FR 100% Cosmetics retailer AI PERFUME SAS (DOUGLAS) DE 385

DESIGUAL SP 10% Clothing retailer EURAZEO SA FR 285

GOMEZ GIRALDO & CO ASSETS CO 100% Grocery & supermarket stores CASINO FR 150

JM BRUNEAU FR LBO BtoB Furniture retailer WEINBERG CAPITAL PARTNERS FR 150

SARENZA FR Development E-commerce (shoes) HLD, BPIFRANCE, FAMILY OFFICES

FR 74

PRO NATURA FR LBO bis Bio fruit & vegetables wholesaler NAXICAP PARTNERS FR < 50

AIREST S.P.A. IT 50% Food & beverage retailer LAGARDERE SERVICES SAS FR 55

SOCIÉTÉ PROVENÇALE D'ACHAT ET DE GESTION (OLLY GAN)

FR LBO ter Clothing retailer

CM-CIC CAPITAL FINANCE, IXO PRIVATE EQUITY, SOCIÉTÉ GÉNÉRALE CAPITAL PARTENAIRES

FR 55

DOGG LABEL FR MBO Clothing retailer SIPAREX, INDIVIDUALS FR 40

JARDILAND.COM SARL FR Institutional

buy-out 100%Online flower and plant seeds retailer

L-GAM ADVISERS LLP GB 35

MENLOOK.COM FR Fund raise Online clothing retailer IDINVEST PARTNERS, BPIFRANCE, PARTECH, ORKOS CAPITAL, 123 VENTURE

FR 23

LES COMPAGNONS DES SAISONS FR Development Garden products retailer FINORPA, BPIFRANCE FR 23

ELEVEN PARIS FR Development Clothing retailer NAXICAP PARTNERS FR 20

HYGENA CUISINE FR 100% Kitchen retailer FOURNIER FR 20

MIM SAS FR Acquisition

100%Clothing retailer MAIN ASIA HK 18

HEDIARD SA FR 100% Delicatessen products retailer DO & CO RESTAURANTS & CATERING AG

AT 17

MEUBLES RAPP FR 100% Home funiture retailer CONFORAMA SA FR n/c

BILLA ( 53 STORES) IT 100% Supermarket chain CARREFOUR SA FR n/c

UNION DES COOPERATEURS D'ALSACE SAS STORES

FR n/c Grocery store operator CARREFOUR SA FR n/c

FLY SWITZERLAND SW 100% Funiture retailer CONFORAMA SA FR n/c

FLY France FR 20% Home funiture retailer CONFORAMA SA FR n/c

MUTANT (63 stores) FR 100% Supermarket chain CASINO SA FR n/c

LE COMPTOIRE DU SURGELE FR 100% Frozen products retailer TOUPARGEL FR n/c


Multi-channel strategies

In the digital area, facing the growth of the e-commerce channel, grocery and non-grocery retailers continued their effort to develop and implement effective multi-channel strategies. Many traditional retailers took advantage of their physical store networks to develop new customers’ solutions with a mix of digital and store experience, especially in the grocery retail where click-and-collect services helped to boost in-store sales, capture customers and gain market shares over pure players.

PwC | 9

M&A in Luxury and Cosmetics have been dynamic in volume and value for corporates looking for growth, synergies and optimization of their value chain.

L’Oréal has been one of the most acquisitive group this year: with a number of strategic acquisitions such as Chinese Magic Holdings International, Decleor and Carita from Shisheido, the Los Angeles make-up brand NYX, and the take over of the Brooklyn brand Carol’s Daughter. These operations well illustrate L’Oréal CEO Jean Paul Agon’s expressed intention to “over perform the market”.

Development in Luxury is mainly driven by the globalization of the sector requiring close monitor of the geographical footprint to reduce regional exposure and to capture growth (such as the slowdown in Asia but strong pace in the US ) their appetite for brands acquisitions, the vertical integration movement to secure know-how, resources and technologies and the consolidation of former acquisitions.

The French luxury group, Kering recentered on its Luxury branch after the sale of La Redoute and the

Redcats brands last year, and finalized the acquisition of the haute horlogerie Swiss brand Ulysse Nardin, adding thus synergies with its Watches & Jewelry division.

Also recentering on luxury, Chanel sold its make-up consumer brand Bourjois to Coty in return for 4.2% of the American perfume manufacturer’s shares, corresponding to 15 million valued at $240m.

The American luxury leader Estée Lauder Group has been acquisitive in France this year: after having bought the high-end fragrance brand Le Labo in October, it acquired the iconic French perfumer Frédéric Malle.

L Capital (the private equity fund sponsored by LVMH) acquired a 30% stake in Vicini SpA, the owner of the Italian luxury shoes Giuseppe Zanotti and a majority stake in Seafolly, the Australian swimwear company (€ 68m turnover).

M&A in cosmetics and luxury Search for jewels

Main deals - Luxury - France (closed in 2014)


(€m) Turnover

BOURJOIS FR 100% Cosmetics brand COTY US 190 n/c

VICINI SPA IT Minority stake

30%Luxury designer footwear

LVMH MOET HENNESSY LOUIS VUITTON SA

FR 90 n/c

GUY DEGRENNE FR 68% Luxury tableware brand HOLDING DIVERSITA FR 20 n/c

ULYSSE NARDIN SW 100% Manufacture of luxury watches

KERING FR n/c 244

TANNERIE LIMOGES SAS FR 100% Leather manufacturer PRADA SPA; CONCERIA SUPERIOR S.P.A.

IT n/c n/c

SEAFOLLY AUS 100% Swimming pool retailer L CAPITAL ASIA (LVMH) FR n/c 71



Main Deals - Consumer Goods Non Food - France (closed in 2014)


(€m)

TRANSITIONS OPTICAL, INC US 51% Eyeglasses lences manufacturer

ESSILOR INTERNATIONAL SA FR 1 399

SPOTLESS GROUP SAS FR 100% Cleaning products HENKEL AG & CO KGAA TS GE 940

MAGIC HOLDINGS INTERNATIONAL LIMITED

HK 100% Cosmetics producer L'OREAL SA FR 549

ADA COSMETICS INTERNATIONAL GMBH

GE LBO bis Cosmetics producer ARDIAN FR 500

DB APPAREL SAS FR 100% Intimates and underware manufacturer

HANESBRANDS INC. US 400

COASTAL CONTACTS INC. CA 100% Online optical products retailer

ESSILOR INTERNATIONAL SA FR 282

DECLEOR SA; CARITA S.A. FR 100% Skin care products L'OREAL SA FR 228

GROUPE BRANDT FR/ES/PO

100% Electric household GROUPE CEVITAL SPA AL 200

SCHLEICH GMBH GE LBO bis Figurine toys manufacturer ARDIAN FR 220

BOURJOIS FR 100% Cosmetics brand COTY US 190

COSTA INC. US 100% Sunglasses and sports apparel

ESSILOR INTERNATIONAL SA FR 176

HILLARYS BLINDS (HOLDINGS) LTD GB RefinancingBlinds and curtains manufacturer

EUROPEAN CAPITAL SA FR 150

CELLO PENS IN 55% to

75%Pen manufacturer BIC FR 53

LABORATOIRES DR NG PAYOT FR LBO Skin care products LBO FRANCE FR 35

ARC INTERNATIONAL COOKWARE SAS

FR 100% Tableware brand AURORA CAPITAL GROUP US 35

SOCIÉTÉ DE GESTION DES BOUTIQUES LIPAULT EURL

FR 100% Luggage manufacturer SAMSONITE INTERNATIONAL SA LU 20

REWARD DISTRIBUTION GROUP AUS 100% Takeaway food containers GROUPE ECOTEL CHOMETTE FAVOR FR 15

ACR GROUP FR 100% Auto. spare parts retailer GROUPE AUTODISTRIBUTION, SA FR n/c

NIELY COSMETICOS BR 100% Hair care products L'OREAL SA FR n/c

NYX COSMETICS US 100% Make up and cosmetics products

L'OREAL SA FR n/c

CAROL'S DAUGHTER US 100% Make up and cosmetics products

L'OREAL SA FR n/c

COLORIGHT ISR 100% Hair care products L'OREAL SA FR n/c

BROOKSIDE DAIRY LTD KE Minority

stake 40%Dairy products producer DANONE SA FR n/c


PwC | 11

M&A in wine and spiritsDrink with moderation

On a worldwide basis, the spirits industry began the year with a record number of transactions in both volume and value. The $16bn acquisition of Beam Inc. by Suntory will drastically accelerate the geographical diversification of the Japanese group. It represents one of the largest spirits and drinks transactions in history.

In France, the industry was significantly less active compared to 2013.

The wine M&A market, generally made up of smaller transactions, has been very cautious in 2014.

The luxury group LVMH acquired the legendary Clos des Lambrays, one of the most beautiful areas of Burgundy wine for a transaction of €101m.

The French wine and spirits giant, Pernod Ricard agreed to purchase Kenwood Vineyards located in the Sonoma Valley (in California) from the sparkling winemaker F. Korbel & Bros. This tactical acquisition allows Pernod Ricard to reinforce its portfolio in the lucrative U.S. beverage market. In that aim, the Group has also spent almost $100m to gain majority control of Avion Spirits LLC, owner of premium tequila brand Avion, increasing its stake from 20% up to 84%.

Main deals - Wine and spirits - France (closed in 2014)


(€m)

CLOS DES LAMBRAYS FR 100% Wine producer LVMH MOET HENNESSY LOUIS VUITTON SA

FR 101

KENWOOD (ETATS-UNIS) US 100% Wine producer PERNOD RICARD FR <80

AVIÓN SPIRITS US 20 to 84% Wine and spirits PERNOD RICARD FR 75

CHÂTEAU SIAURAC & COMPANY FR Minority

stake unknown %

Wine producer ARTEMIS DOMAINES SA FR n/c

CELLIERS DU PRIEURE SA, LES FR Acquisition

100%Wine producer ACKERMAN SA FR n/c

SOCIETE D'EXPLOITATION DU CHATEAU DAUZAC SAS

FR

Acquisition increased

from 58% to 100%

Wine producer MUTUELLE ASSURANCES DES INSTITUTEURS DE FRANCE

FR n/c

CHATEAU RIPEAU FR Acquisition

100% Wine producer GREGOIRE FAMILY FR n/c

CHATEAU BEAUREGARD; PAVILLON DE BEAUREGARD; CHATEAU SAINT ROBERT; CHATEAU BASTOR-LAMONTAGNE

FR 100% Wine producer MOULIN FAMILY; CATHIARD FAMILY Ind. n/c

CHATEAU LAFAURIE PEYRAGUEY FR 100% Wine producer SILVIO DENZ (PRIVATE INVESTOR) Ind. n/c

WINE AND CO S.A. FR 100% E-commerce (wine)

COMPAGNIE FINANCIERE EUROPEENNE DE PRISES DE PARTICIPATION SA (LA MARTINIQUAISE)

FR n/c



Private equity trendsDifficult to open the game

Activities involving private equity houses have remained strong over the year, supported by the additional liquidity resulting from recent fund raising and lower cost of financing. LBO remained also a privileged option for the industry to find acquirers for carve out disposal and to support development funding of growing businesses.

As an example, PAI took a 50% interest in Labeyrie holding company alongside Lur Berri, bringing not only the financing support required for Labeyrie’s development abroad but also its strong international expertise in the food business.

Competition between private equity and corporate buyers is however fierce, as the latters are more willing to include part of the expected synergies in their valuation and offer higher multiples if the acquisition is considered to be strategic. Nevertheless, in the context of second or third generation LBOs, corporate often refuse to enter the auction as the speed of the disposal process is not adapted to corporate decision patterns.

Some noticeable LBOs operations in 2014 in the consumer industry include Ardian acquiring ADA Cosmetics International (Europe’s leading manufacturer of high quality hotels cosmetics) sold by fund Carlyle and Schleich (toy manufacturer) from the fund HgCapital.

Main deals - Private Equity - France (closed in 2014)


(€m)

VIVARTE SA FR Debt restructuring Clothing retailer OAKTREE, ALCENTRA, GOLDEN TREE , BABSON

2 000

ADA COSMETICS INTERNATIONAL GMBH

GB LBO bis Cosmetics producer ARDIAN 500

DESIGUAL SP 10% Clothing retailer EURAZEO SA 285

LABEYRIE FINE FOODS FR LBO bis Seafood, frozen and fresh caterer

PAI PARTNERS 250

SCHLEICH GMBH GB LBO bis Figurine toys manufacturer ARDIAN 220

BISCUITS POULT FR LBO bis Biscuit manufacturer QUALIUM INVESTISSEMENT <170

HILLARYS BLINDS (HOLDINGS) LTD

GB Refinancing Blinds and curtains manufacturer

EUROPEAN CAPITAL SA 150

JM BRUNEAU FR LBO BtoB Furniture retailer WEINBERG CAPITAL PARTNERS 100

DGF FR LBO bis Bakery product manufacturer 21 CENTRALE PARTNERS 80

SARENZA FR Development E-commerce (shoes) HLD, BPIFRANCE, FAMILY OFFICES 74

SOCIÉTÉ PROVENÇALE D'ACHAT ET DE GESTION (OLLY GAN)

FR LBO ter Clothing retailer CM-CIC CAPITAL FINANCE, IXO PRIVATE EQUITY, SOCIÉTÉ GÉNÉRALE CAPITAL PARTENAIRES

55

AGRIAL ENTREPRISE FR Development Agribusiness cooperative UNIGRAINS, CRÉDIT AGRICOLE 50

PRO NATURA FR LBO bis Bio fruit & vegetables wholesaler

NAXICAP PARTNERS < 50

DOGG LABEL FR MBO Clothing retailer SIPAREX, INDIVIDUALS 40


PwC | 13

Main deals - Private Equity - France (closed in 2014)


(€m)

JARDILAND.COM SARL FR LBO Online flower and plant seeds retailer

L-GAM ADVISERS LLP 35

LABORATOIRES DR NG PAYOT FR LBO Skin care products LBO FRANCE 30

LES COMPAGNONS DES SAISONS

FR Development Garden products retailer FINORPA, BPIFRANCE 23

MENLOOK.COM FR Fund raise Online clothing retailer IDINVEST PARTNERS, BPIFRANCE, PARTECH, ORKOS CAPITAL, 123 VENTURE

23

ELEVEN PARIS FR Development Clothing retailer NAXICAP PARTNERS 20

LA FOIR'FOUILLE FR LBO bis Retailer CM-CIC, NORD CAPITAL INVESTISSEMENT, TURENNE CAPITAL, SGCP

n/c

COFIGEO FR MBO bis Ready meals caterer MBO PARTENAIRES, SG CP, GSO CAPITAL, CA NORD MIDI-PYRÉNÉES

n/c

"CHILDREN WORLDWIDE FASHION "

FR Development Clothing retailer DZETA CONSEIL n/c

WOLF LINGERIE FR MBO bis Clothing wholesaler GIMV, ALSACE CAPITAL n/c

FATHER & SONS FR LMBO Clothing retailer AZULIS CAPITAL, BPIFRANCE INVESTISSEMENT, GALIA GESTION, EURO CAPITAL

n/c

ABRIDEAL FR MBO Pool cover retailer IXO PRIVATE EQUITY n/c

CHOCOLATERIE DE PUYRICARD FR Development Chocolate producer CM-CIC CAPITAL FINANCE n/c

CARAMBELLE (SCRAPCOOKING) FR OBO Kitchenware PALUEL-MARMONT CAPITAL n/c

GLACES DE LYON FR MBI Icecream producer BPIFRANCE INVESTISSEMENT, CARVEST n/c


Qualium acquired Biscuits Poult (private label biscuits manufacturer) from LBO France. 21 Centrale Partners acquired DGF (products for bakeries) from the fund Qualium.

The largest Retail transaction relates to the struggling Vivarte, eventually taken over by funds led by Oaktree jointly with a €2bn debt write off. Other retail transactions mainly include acquisition of strong or niche brands such as Desigual, Olly Gan, Dogg Label (Le Temps des Cerises / Japan Rags brands), Eleven Paris.


Financing opportunitiesShadow banking in the spotlight

European loan Markets rebounded to levels not seen since the credit crunch, in both terms of liquidity levels and flexibility over looser terms. Volumes have been driven by a strong investors’ appetite and the subsequent impact on liquidity, debt terms, increased appetite for risk, and declining pricings. In terms of debt purpose, volumes increases were mostly driven by corporate refinancings and M&A financings.

The overall long term financing landscapes in Europe

Long term financing is key to corporate growth to either drive:• Organic growth and improve

competitiveness

• M&A growth to gain scale and compete nationwide or worldwide

• To refinance existing debt

• To bridge temporary financial difficulties

The Western European long term financing in 2014 amounts to a total of c. €2,000bn in Europe, among which c. €600bn is M&A and PE related. Representing 20% of the overall volumes each, France is with Germany the second largest countries behind the UK (25%).

M&A-driven financings (including PE)

Issuances in M&A financings have grown significantly but remains below 2007 levels as highlighted in the graph hereafter. While refinancings represented 60% of 2014 volumes, debt for new M&A transactions is expected to become the key driver in 2015 and 2016.

M&A new issuances volumes

2005 2006 2007 2008 2009 2010 2011 2012 2013 20140B

20B

40B

60B

80B

100B

120B

140B

160B

180B

€

PwC | 15

As a demonstration of investors’ appetite, 40% of 2014 transactions were categorized as cov-light (+20 ppts vs 2013), mostly on the larger issuances. Spreads for sub investment grades (companies with ratings or equivalent ratings of BBB- or below) have declined but should remain above historic pre-2007 levels.

In terms of borrowers, the consumers industry represents c. 14% (+3.9 ppts vs 2013) of volumes and the retail sector 8% (+1.8 ppts).

New issues spreads in France for a BB

E/L+150

E/L+200

E/L+250

E/L+300

E/L+350

E/L+400

E/L+450

E/L+500

E/L+550

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Banks avg spreads Institutional avg spreads

Disintermediation: non-bank lenders are key to the M&A financing landscape

From 2014, institutional lenders (ie. non banks) are the only driver to the post credit crunch debt markets, representing 60% of issuances volumes. This is to be compared to the overall long term financing markets where institutional lenders represent c. 35% of the debt issued. There are approximatively 110 “active” lending banks in the Western European arena and almost 300 institutional lenders (including debt funds, CLOs (collaterized debt obligations) and insurance groups). While most of those lenders are lending in France, over 90% of institutional players are based abroad (mainly UK, US and Ireland).


Conclusion 2015 prospects

There is every reason to believe that 2015 will be very active in spite of a dull underlying economic and social background in Europe, with yet a large volume of transactions.

With even more quantitative easing from the BCE and institutionals, a weak Euro and the oil price decline will play favorably for a number of European groups, which should foster even more M & A transactions in a Retail and Consumer sector that still needs to restructure in Europe.

Some of 2014 trends are expected to amplify in 2015 :• Rationalization of consumer

goods portfolio of brands (particularly in food and personal care) to concentrate investment on their block buster brands. This move should be amplified as consumer goods group are looking for cost savings in order to compensate the few points of margin lost in the retailers price war of the past few months.

• The development of e-commerce will continue to impact brick and mortar retailers.

• Corporate are likely to perform drastic selection to identify the activities they want to keep and expand, disposing of smaller or underperforming ones they cannot afford to fund anymore.

• Tactic acquisitions will continue to take control of niche brands, market share in growing or emerging markets, particularly in the luxury and high hand consumer goods segment. With declining growth prospects in China, international expansion should be more diversified.

• The search for gain critical mass is likely to continue in the agribusiness and food sector in order to generate sufficient operational and commercial synergies.

• Debt financing is back to fuel M&A transactions at attractive terms and pricing.

• Lastly, a number of local players in financial difficulties are likely to end up looking to partner with stronger players to preserve the largest part of their activities, particularly in the apparel and specialized retail.

Private equity are expected to have an intense activity in 2015 with new opportunities of acquisitions resulting from the above corporate trends in the retail and consumer goods sector, a large number of LBO likely to be placed on the market, in a context of significant amount of funding available for M&A financing at very reasonable cost.

Crédit photos : photothèque PwC et Istock.

© 2015 PricewaterhouseCoopers France.Tous droits réservés.

www.pwc.fr

Sabine Durand-Hayes Partner PwC Transactions Retail & Consumer Leader PwC France [email protected] +33 1 56 57 85 29

Ghislaine Chevalier Director PwC Transactions [email protected] +33 1 56 57 16 04

Sébastien Dalle Partner PwC Transactions, Business Recovery Services [email protected] +33 1 56 57 80 13

Arnaud Heck Director PwC Transactions, Financing [email protected] +33 1 56 57 48 85

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