TheDeal Report H.J. Heinz Co.

February 21, 2015

H.J. Heinz Co.

www.heinz.com HNZNYSE:

600 Grant StreetPittsburgh PA 15219United States

412-456-5700Phone: 412-456-6015Fax: CEO: William R. Johnson

General Counsel: Theodore Bobby

FoodIndustry:

RECENT NEWS:The latest dissident weapon: ‘name-brand’CEO advisersFeb 20, 2015

Debt Financing: Caesars Entertainment, NII Holdings, Jurys Inn,H.J. Heinz, PresidioJan 26, 2015

Heinz to sell $2B of senior notes (BRK.A)Jan 26, 2015

Fraidin joins Ackman after half century at law firmsJan 20, 2015

Daystar Desserts acquired by PE firmSuperiorJan 09, 2015

Trian launches proxy fight in quest to break up DuPontJan 09, 2015

Wintergreen eyes 2015 activism atCoca-ColaDec 16, 2014

Wintergreen Advisers steps up Coke campaignDec 16, 2014

A requiem for the LBONov 07, 2014

Snow Phipps wins PE-backed Teasdale FoodsOct 29, 2014

Ahead of the newsSep 16, 2014

Sense of the markets: Don't ring the death knell yet on LBOsSep 16, 2014

TABLE OF CONTENTS:COMPANY PROFILE ................................................................................................................................................ PAGE 1RECENT LEGAL ADVISERS .................................................................................................................................... PAGE 3RECENT FINANCIAL ADVISERS ............................................................................................................................. PAGE 4RECENT DEALS ....................................................................................................................................................... PAGE 5RECENT NEWS ........................................................................................................................................................ PAGE 8

Corporate Dealmakers Suite

H.J. Heinz Co. of 2702/21/2015©Copyright 2015, The Deal. All Rights Reserved. null

http://www.heinz.com

mailto:?subject=The Deal Pipeline's Company Report on H.J. Heinz Co.&body=Here is the H.J. Heinz Co. company report from The Deal Pipeline: http://pipeline.thedeal.com/TheDeal_Report_H.J._Heinz_Co..pdf%0D%0DIf you cannot access this report or are interested in becoming a subscriber yourself, please contact Michael Crosby [email protected] 212-313-9325. Forgot your login credentials to The Deal Pipeline? Contact customer service at [email protected] or 1-888-667-DEAL(3325). For international callers: 212-313-9251%0D%0DYou are receiving this email because a colleague found this report from The Deal Pipeline and wanted to share it with you. You are not subscribed to any e-mail list and will not receive any further email unless your colleague wishes to share information from The Deal Pipeline with you again.

Corporate Dealmakers Suite

Corporate Dealmaker: Mitchell Ring

Title: Senior Vice President, Business Development

Linkedin: http://www.linkedin.com/pub/mitch-ring/30/984/50bBiography: Mitch Ring was previously vice president and a member of the Heinz management committee from 1996 to2005. Ring joined Heinz in 1991 after serving as vice president marketing at Citibank NA from 1990 to 1991, business unitdirector/marketing director at M&M/Mars from 1983 to 1989 and in various marketing and finance positions at GeneralFoods from 1974 to 1983.

Ring has both his B.S. and M.S. degrees from the Sloan School of Management of the Massachusetts Institute of Technology.


http://pipeline.thedeal.com/tdd/ViewPeople.dl?id=799551

http://www.linkedin.com/pub/mitch-ring/30/984/50b

Recent Legal Advisers

COMPANY ROLE PROFESSIONAL FIRM DEAL DATE

Target Bick, John Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Target Davis, Michael Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Target Ferrell, Kathleen Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Target Florack, James Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Seller Golden, Arthur Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Target Harty, Ronan Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Seller Hochbaum, Lee Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Target Hudson, Sophia Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Target Kaplan, Michael Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Seller Lin, Kyoko Davis Polk & Wardwell LLP H.J. Heinz Co. 02/14/13

Target Carlton, Rod Freshfields Bruckhaus Deringer LLP H.J. Heinz Co. 02/14/13

Target Cronk, Jeremy Freshfields Bruckhaus Deringer LLP H.J. Heinz Co. 02/14/13

Target Hutton, Susan Stikeman Elliott LLP H.J. Heinz Co. 02/14/13

Target Stockwell, Alexandra Stikeman Elliott LLP H.J. Heinz Co. 02/14/13

Buyer Bick, John Davis Polk & Wardwell LLP Foodstar Holdings Pte. Ltd. 06/21/10

Buyer Chen, Yixin Davis Polk & Wardwell LLP Foodstar Holdings Pte. Ltd. 06/21/10

Buyer Delia, Andrew Davis Polk & Wardwell LLP Foodstar Holdings Pte. Ltd. 06/21/10

Buyer Ferrell, Kathleen Davis Polk & Wardwell LLP Foodstar Holdings Pte. Ltd. 06/21/10

Buyer FitzGerald, Edmond Davis Polk & Wardwell LLP Foodstar Holdings Pte. Ltd. 06/21/10

Buyer Holloway, Mark Davis Polk & Wardwell LLP Foodstar Holdings Pte. Ltd. 06/21/10


Recent Financial Advisers

COMPANY ROLE PROFESSIONAL FIRM DEAL DATE

Target Baronoff, Steven Bank of America Merrill Lynch H.J. Heinz Co. 02/14/13

Seller Effron, Blair Centerview Partners LLC H.J. Heinz Co. 02/14/13

Seller Luongo, Peter Centerview Partners LLC H.J. Heinz Co. 02/14/13

Buyer JPMorgan Securities LLC Coniexpress SA 02/01/11


Recent Deals

COMPANY

ROLE

DEALTYPE

DEAL INDUSTRY REGION DATEVALUE($ MIL)

Lien holderLienFinancing

H.J. Heinz Co. Food

United States - EastMidAtlanticNorth AmericaUnited States

03/13/13 2,000.00


H.J. Heinz Co. Food


03/13/13 6,550.00


H.J. Heinz Co. Food


03/13/13 2,950.00

SellerTargetCommittee

MergerAcquisition

H.J. Heinz Co. Food

North AmericaUnited States - EastUnited StatesMidAtlantic

02/14/13 28,000.00

Likelybidder

Auction Nestle SA - Latin America assets Food Latin America 01/09/13 1,000.00

BuyerMergerAcquisition

Rafferty's Garden Pty Ltd. FoodAustralia and Pacificislands

10/29/12

SellerTarget

MergerAcquisition

H.J. Heinz Co. (Gourmet Desserts division)FoodManufacturing

United StatesNorth AmericaUnited States - EastNortheastPennsylvania

05/13/12

Likelybidder

Auction Pfizer Nutrition Healthcare

United StatesNortheastNew York metroNorth AmericaNew York stateUnited States - East

07/07/11 1,000.00

Likelybidder

AuctionPfizer Inc. - non-core assetsPfizer Inc. - Capsugel unit

Healthcare

United States - EastNew York metroUnited StatesNortheastNorth AmericaNew JerseyNew York state

06/04/11 1,000.00


Coniexpress SA

FoodConsumer andhousehold productsManufacturing

BrazilLatin AmericaSouth America

02/01/11

Merger Food


Buyer Acquisition Foodstar Holdings Pte. Ltd. Manufacturing Asia 06/21/10 165.00


Golden Circle Ltd. FoodAustralia and Pacificislands

10/06/08 216.00


Benedicta SA FoodEuropeEurope, U.K. and Ireland(includes Iceland)

07/02/08

Likelybidder

AuctionMead Johnson & Co.ConvaTec Inc.

Healthcare

North AmericaUnited States - CentralNortheastNew JerseyUnited StatesUnited States - EastMidwest

12/05/07


Cadbury's Australian jams, toppings and jelliesbusiness

FoodAustralia and Pacificislands

06/05/07 58.00

BankruptcyFiling

Valley Food Services LLC Retail 02/14/06 23.00


Nancy's Specialty Foods Food

North AmericaUnited StatesUnited States - WestFar WestNorthern CaliforniaSilicon Valley

07/19/05 130.00


Lea & PerrinsHP Foods Ltd.

FoodEurope, U.K. and Ireland(includes Iceland)Europe

06/20/05 820.00

Actualbidder

Auction Nancy's Specialty Foods Food

United StatesFar WestSilicon ValleyUnited States - WestNorthern CaliforniaNorth America

06/13/05 50.00

SellerTarget

AuctionH.J. Heinz Co. - European frozen and seafoodbusinesses

FoodEurope, U.K. and Ireland(includes Iceland)Europe

05/26/05 250.00

Actualbidder

Auction HP Foods Ltd. FoodEurope, U.K. and Ireland(includes Iceland)Europe

03/31/05 500.00

BankruptcyFiling

Winn-Dixie Stores Inc.FoodRetail

Southeast 02/21/05 2,235.56

Likelybidder

AuctionCirio Finanziaria SpA - Del Monte PacificLtd.(stake)

FoodEuropeEurope, U.K. and Ireland(includes Iceland)

05/24/04 50.00

BankruptcyFiling

Fleming Cos.FoodRetail

Southwest 04/01/03

BankruptcyFiling

Communication Dynamics Inc. Telecommunication New York metro 09/23/02

TargetSeller

MergerAcquisition

H.J. Heinz Co. (Seafood, Pet Food, Private LabelSoup, & Baby Food Divisions)

Food 06/13/02 2,800.00



Delimex Holdings Inc. Food

Southern CaliforniaNorth AmericaUnited StatesFar WestUnited States - West

07/26/01 200.00

Likelybidder

MergerAcquisition

VF Brands Inc. Food

United States - EastUnited StatesNorth AmericaMidAtlantic

03/21/01 195.00


United Biscuits Finance plcFoodManufacturing

EuropeEurope, U.K. and Ireland(includes Iceland)

10/23/99 318.00


Recent News

The latest dissident weapon: ‘name-brand’ CEO advisersRonald OrolUpdated 04:38 PM, Feb-20-2015 ET

Last month, Nelson Peltz's activist fund Trian Fund Management LP announced it had formed an advisory board stacked with threehigh-profile ex-CEOs. Leading the group is former chief executive William Johnson, who, in January, was installed onH.J. Heinz Co.the board of PepsiCo Inc. (PEP) as part of a settlement with Trian after Peltz had urged the soda and sports drink company to break up.Other heavyweight ex-chief executives on the Trian panel: Dennis Reilley, former CEO of Praxair Inc. (PX) and current chairman ofMarathon Oil Corp. (MRO), and Dennis Kass, the former CEO of investment firm Jennison Associates LLC and a current director atLegg Mason Inc. (LM), where until December, Peltz served on the board. Trian is still the asset manager's top shareholder. Trian is thelatest activist seeking to formalize relationships with high-profile executives who, the plan goes, will apply pressure to targetedcompanies. The CEO advisory panels, some publicly disclosed-others not so public-are the latest arrow in the activist quiver. "By settingup an advisory panel Trian is legitimizing its activist efforts," said Steve Wolosky, partner at Olshan Frome Wolosky LLP in New York.Wolosky, who leads his firm's activist investor practice, said these advisory panels can be kept private or made public. "By setting up apanel and making it public, an activist is in a way marketing itself to investors showing how they can attract high level talent," he said.Though Trian used the word "advisory," those experienced CEOs may be on tap to do more than simply provide advice: If Trian decidedto mount a proxy fight, the panelists can serve as director nominees. As the firm noted in its announcement, the advisory partners "mayalso join the boards of directors of companies in which Trian invests." TRIAN ISN'T ALONE in having C-suite executives on call forpotential campaigns.Barington Capital Group LP, for example, has a network of advisers, including Javier Perez, a former McKinsey &Co. partner, who the activist fund nominated to the board of chemical company Omnova Solutions Inc. (OMN) in December. Baringtonalso recently got another of its advisers, the ex-CEO of Scientific Games Corp., Joseph Wright Jr., on the board of insurance industrysoftware provider Ebix Inc. (EBIX). Some activists will hire advisers for a particular campaign. Take Starboard Value's Jeffrey Smith.In December, when Starboard upped its stake at packaging company MeadWestvaco Corp. (MWV) it also reported an advisoryagreement with Steven Klinger and George Wurtz, two people the fund retained with a $50,000 fee each. (As part of their advisoryagreement with Starboard, Wurtz and Klinger agreed to use the proceeds from their fees to buy shares in MeadWestvaco.) In aregulatory filing, Starboard said it retained them because of their "unique skill set, industry experience and industry knowledge." Wurtzis chairman of Soundview Paper, a tissue products company, and Klinger is former COO of Smurfit-Stone Container Corp., according tothe filing. A person familiar with Starboard said Wurtz and Klinger could make good dissident board candidates if the activist decided tolaunch a proxy fight at the company-a campaign that is now likely to be off because Meadwestvaco agreed to merge with Rock-TennCo. (RKT)-a cash and stock deal valued at about $16 billion-after the activist showed his hand. Starboard had a similar arrangement setup for its ultimately successful board takeover campaign at Darden Restaurants Inc. (DRI) last year. In March 2014, Starboard retainedCraig Miller, an ex-CEO of Ruth's Chris Steak House Inc., as an adviser with a "broad restaurant industry experience." Thatarrangement included the same $50,000 fee Starboard offered to Wurtz and Klinger. A person familiar with Starboard said the fundhires people as advisers to teach its managers about the industries involved and help identify areas in which a company could improve,adding that they also may end up making good dissident board candidates. Plus, known industry experts can add credibility to anactivist's platform when meeting with institutional investors. "They realized that when they go meet with investors in a heated proxyfight they are likely to be treated more seriously if they roll out some name-brand CEO guy at the meeting who will talk about how thecompany is all screwed up and if he was running things it would be all different," said one adviser to companies. Wolosky argued thatan advisory panel can provide a network of experts. "Having a CEO or ex-CEO with a lot of expertise could be valuable for activiststhat want to do a deep dive into a company's operational capabilities," Wolosky said. "A CEO could help you figure out if the costsavings will be there and why its operating margins are off kilter." IN SOME WAYS, activist fund managers are taking a page out of theplaybook of venture capital funds and private equity funds. "The PE funds and VC funds have been using advisory panels for years thatare composed of brand-name CEOs, former high-ranking governmental officials and other masters of the universe," said KeithGottfried, partner with Morgan, Lewis & Bockius LLP in Washington. "They have advisers that they look to for relevant industryexperience and connections, to help them source deals, for market intelligence and to assist with due diligence." Douglas Braunstein andJames Woolery, two Wall Street veterans, set up a different sort of advisory panel at their recently formed activist-style fund HudsonExecutive Capital. They signed up 14 former and current CEOs, most of whom are or were Fortune 500 executives, as both advisers andpartners, including former Verizon Communications Inc.'s (VZ) CEO Ivan Seidenberg. As part of the strategy, the partners are expectedto use their industry expertise to formulate ideas for improvement that they will bring to targeted companies. (In addition, the CEOgroup will be heavily involved in discussions with top executives at targeted companies). "It is very powerful to be able to have aCEO-to-CEO discussion about strategic options," Woolery said. The activist fund said it has no plans to launch proxy fights; it willinstead target companies that the founders believe will be receptive to doing something in a friendly, negotiated fashion. However, oneadviser to companies targeted by activists said he wondered how much success Hudson might have if they can't threaten-or go throughwith-a proxy fight. "I may be cynical, but I think without the threat of a proxy contest they are less likely to have success," said thecompany adviser. Nevertheless, Woolery said he is hoping his background in participating in panels bringing together institutionalinvestors and corporate directors will help. In 2014, he aided in the formation of the Shareholder-Director Exchange, an alliance of topinstitutional investors like BlackRock Inc. (BLK) and Vanguard and corporate directors who seek to improve company-investordialogue in the face of a growing onslaught of activist insurgencies. Woolery added that he believes there is an opportunity for SDXmembers and Hudson's CEO network to communicate when it comes to the fund's investments. Still, a potential downside exists tobringing in a former CEO from a company's competitor for what is advertised as simply a strategic options review. The reaction may be


that the activist's adviser is simply a "CEO in waiting," Gottfried said. "The CEO is concerned that the activist is coming for his headand wants to eventually replace him with the former CEO who is included on the dissident's nominee slate and who the current CEOcannot reasonably deny is qualified for the job," he noted.


Recent News

Debt Financing: Caesars Entertainment, NII Holdings, Jurys Inn, H.J. Heinz,PresidioEdited by Nils Van LiewUpdated 01:40 PM, Jan-26-2015 ET

This report is an exclusive compilation of financing intelligence gathered by The Deal Pipeline's editorial staff. Today's highlightsinclude:

Caesars venue trial begins

NII to sell Mexican operations

Lone Star checks in at Jurys Inn

Heinz to sell $2B of senior notes

Apollo shelves $400M Presidio deal loan

The full report follows.

Bankruptcy

Caesars venue trial begins

Lawyers for Caesars Entertainment Operating Co. and its creditors have kicked off arguments on where the casino operator's bankruptcycase should proceed.

On Monday, Jan. 26, a two-day hearing began before Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware inWilmington on whether hearings should be held there, where creditors filed an involuntary petition for the company, or in the NorthernDistrict of Illinois in Chicago, where CEOC commenced its own Chapter 11 case.

The subsidiary of Caesars Entertainment Corp. (CZR) and dozens of units on Jan. 15 submitted voluntary petitions in Chicago, just daysafter second-lien bondholders led by affiliates of Appaloosa Management LP ($13.11 million), Oaktree Capital Management LP ($18.24million) and Tennenbaum Capital Partners LLC ($9.73 million) had sought a stay of any parallel bankruptcy proceeding. The petitioningcreditors on Jan. 12 commenced an involuntary Chapter 11 case for CEOC in Wilmington.

Gross on Jan. 15 then stayed the proceedings in the Chicago case until the Delaware court issued an order resolving the venue dispute.

At Monday's hearing, Bruce Bennett of Jones Day, counsel to the petitioning creditors, argued CEOC has "not acted as a fiduciary" forits creditors in its prepetition transfers, in its search for a venue or in the terms of the reorganization plan proposed in its restructuringsupport agreement. Full report

NII to sell Mexican operations

Wireless services provider NII Holdings Inc. (NIHDQ) on Monday, Jan. 26, announced plans to sell its Mexican operations to AT&TInc. (T) for $1.88 billion less outstanding debt at closing. The Reston, Va., company, which provides wireless telecommunicationsservices mainly in Mexico and Brazil, hopes to file a bidding procedures motion in the U.S. Bankruptcy Court for Southern District ofNew York in Manhattan on Tuesday, according to court filings. The deal, which will be open to better and higher offers, will need theblessing of both Judge Shelley Chapman and Mexican regulators. The company said Monday it hopes to close the transaction by themiddle of 2015. NII filed for Chapter 11 on Sept. 15 after the company failed to make $118.75 million in interest payments due Aug. 15


on 7.875%, 11.375% and 10% notes issued by two units. A 30-day grace period under which NII could have made the paymentssubsequently expired. Additionally, a forbearance agreement with certain holders of the senior notes issued by NII Capital Corp. and NIIInternational Telecom SCA, including Aurelius, expired on Aug. 15. Full report

Private Equity

Lone Star checks in at Jurys Inn

Dallas private equity shop Lone Star Funds has agreed to buy Jurys Inn Group Ltd. for £680 million ($1.02 billion), the Irish hotelsgroup's departing shareholders announced on Monday, Jan. 26. The sale comes less than two years after the chain underwent adebt-for-equity swap. The restructuring relieved it of a massive burden of buyout leverage taken on in 2007, at the height of the Irishproperty bubble. Late last year, Jurys bought back a tranche of remaining debt held by the Irish Bank Resolution Corporation, andbrought in advisers to consider its options. Dublin-based Jurys operates 31 hotels in total, 28 under the Jurys Inn Brand and 3 under theDoubleTree by Hilton and Hilton Garden Inn brands. It has four hotels in London, another 21 elsewhere in the U.K., five in Ireland andone in Prague. The sellers are Oman Investment Fund, Mount Kellet Capital Management LP, Royal Bank of Scotland Group plc's Irishunit Ulster Bank, Westmont Hospitality Group, of Mississauga, Ontario, and Avestus Capital Partners. Full report

Heinz to sell $2B of senior notes

H.J. Heinz Co.pany announced Monday plans to raise $2.0 billion through the issuance of second lien senior secured notes. It intends touse the proceeds to repay a portion of its existing term loans, said the Pittsburgh-based ketchup maker in a press release. The issuer --through a syndicate that includes J.P. Morgan and Wells Fargo -- is seeking a ten year loan. The expected BB/B1 rated facility is said tocome with five year no call protection and price late Monday, Jan 26. Heinz's existing term loans date back to the company's June 2013acquisition by Berkshire Hathaway Inc. (BRK.A) and Brazil's 3G Capital. Full report

Apollo shelves $400M Presidio deal loan

A syndicate including Barclays and Credit Suisse has postponed a $400 million credit facility backing the planned acquisition ofPresidio Holdings Inc. by Apollo Global Management LLC (APO), according to Bloomberg. Initial price talk on the now-shelved eightyear no-call three notes was between 10.75% and 11.00%, inclusive of an expected original issue discount. Indicated terms failed togenerate sufficient demand for the expected Caa1/CCC+ rated facility, according to sources cited by the news service. Thepostponement comes days after bankers sweetened the terms on a concurrent seven year deal loan, from L+475 and an OID of 99 toL+575 and 97.0. That facility, sized at $600 million, is expected to allocate late Monday. Apollo announced December 1 an agreementto acquire Presidio from American Securities LLC for an undisclosed sum. Full report


Recent News

Heinz to sell $2B of senior notes (BRK.A)

Updated 11:26 AM, Jan-26-2015 ETH.J. Heinz Co.pany announced Monday plans to raise $2.0 billion through the issuance of second lien senior secured notes. It intends touse the proceeds to repay a portion of its existing term loans, said the Pittsburgh-based ketchup maker in a press release.The issuer --through a syndicate that includes J.P. Morgan and Wells Fargo -- is seeking a ten year loan. The expected BB/B1 rated facility is said tocome with five year no call protection and price late Monday.Heinz's existing term loans date back to the company's June 2013acquisition by Berkshire Hathaway Inc. (BRK.A) and Brazil's 3G Capital. Those loans priced at spreads over Libor of between 225 and250 basis points, according to S&P's LCD.


Recent News

Fraidin joins Ackman after half century at law firmsby David MarcusUpdated 03:10 PM, Jan-20-2015 ET

Bill Ackman's investment vehicle Pershing Square Capital Management LP announced Tuesday that it hired Stephen Fraidin as vicechairman. Fraidin, 75, had been a partner at Kirkland & Ellis LLP and often represented Pershing Square, most recently last year when itteamed with Valeant Pharmaceuticals International Inc. (VR X) in a hostile bid for Allergan Inc. (AGN). The Botox maker ended upselling to Actavis plc (ACT), but Ackman made a profit of $2.7 billion on the deal.

The two men have known one another for about 30 years. Ackman grew up in Chappaqua, N.Y., where Fraidin raised his family.Fraidin's two sons are about the same age as Ackman, and all three of the boys played tennis. During high school, Ackman and one ofFraidin's sons were in a gifted students program at Columbia University, and Fraidin drove them back and forth from Chappaqua. WhenAckman graduated from Harvard Business School in 1992, he asked Fraidin to do the legal work on the formation of Gotham Partners,which Ackman co-founded. The lawyer initially demurred, suggesting that Ackman see Paul Roth, a specialist in investment funds atSchulte, Roth & Zabel LLP, but Ackman was persistent, and Fraidin relented, Fraidin hasn't done all of Ackman's legal work, in partbecause of client conflicts, but has had a consistent relationship with Ackman.

Ackman has "been talking to me about this for several years," Fraidin said, "and it's something that we both have been considering forquite some time. I'm going to be going to all the investment team meetings. I'm going to be involved to a greater extent in matters otherthan pure legal advice. And I'll be able to counsel Bill on a more consistent and uninterrupted basis."

The move caps a very distinguished career in the law for Fraidin. A 1961 graduate of Tufts University, he joined Fried, Frank, Harris,Shriver & Jacobson LLP out of Yale Law School and made partner in 1971. He represented Bendix Corp. CEO William Agee in hislegendary failed bid for Martin Marietta Corp. in 1982, the deal that popularized the term "Pac-Man defense." Fraidin also representedForstmann Little Inc. on its failed bid for RJR Nabisco in 1988. More recently, Fraidin advised 3G Capital Partners LP on its 2013purchase of and on Burger King Worldwide Inc.'s (BKW) acquisition of Tim Hortons Inc. last year.H.J. Heinz Co.

Fraidin moved to Kirkland in 2003 and said his time at the firm was "incredibly happy and successful. It's a great law firm with terrificpeople. The decision to go to Kirkland could not have worked out better."

"I've had a lot of opportunities," to leave the practice of law, Fraidin said, "but this is by far the only one I found appealing, and it's comeat the right time for me. Bill is absolutely extraordinary. I don't think there's anyone like Bill, and I've spent 50 years in two law firms,and this was an opportunity to do something different."


Recent News

Daystar Desserts acquired by PE firm Superior

Updated 05:50 PM, Jan-09-2015 ET

Daystar Desserts LLC was acquired by Detroit-based private equity firm Superior Capital Partners LLC from bakery industry executiveJohn Fernandez, the acquirer said on Thursday, Jan. 8. Terms of the transaction were not disclosed. The target will be a bolt-on toDianne's Fine Desserts, which was bought by Superior in 2012 from food giant Richmond, Va.-based Daystar is a makerH.J. Heinz Co.of branded and private label cheesecakes, bar cakes, mason jar cakes and individual desserts for retail. Newburyport, Mass.-basedDianne's is a maker of frozen thaw-and-serve desserts for the foodservice industry. The deal closed on New Year's Eve and was financedin part with money from Superior's inaugural fund raised in 2008. The firm said since acquiring Diane's in 2012 it has transformed thecompany into a $100 million platform business. — Richard Collings


Recent News

Trian launches proxy fight in quest to break up DuPontby Lou WhitemanUpdated 10:15 AM, Jan-09-2015 ET

Nelson Peltz's Trian Fund Management LP is taking its fight for influence at E. I. du Pont de Nemours and Co. (DD) to shareholders,announcing plans to nominate a slate of four directors to the chemicals giant's board.

Trian, owner of about 2.7% of DuPont, has been campaigning to split the company for nearly two years. The firm has complained thatDuPont's board has not held management accountable for missing earnings and revenue targets, and said the company has oversizedcosts and poor corporate governance practices.

The fight over the future of DuPont is part of a broader battle playing out all over the chemicals space as companies — often at theprodding of investors — are debating the benefits of being a one-stop chemicals supermarket versus transforming into smaller, morespecialized producers.

Trian has called on DuPont to separate its faster-growing businesses like agriculture and nutrition from its more commodity operationsmaking the raw materials for such products. That battle has also played out at Dow Chemical Co. (DOW), where Daniel Loeb's ThirdPoint LLC has made similar demands.

Meanwhile, companies like Platform Specialty Products Corp. (PAH) have aggressively been seeking out asset-light businesses fromthese chemicals giants, in Platform's case teaming with Jarden Corp. founder and chairman Martin Franklin to roll up businesses.

DuPont to date has not followed the path of archrival Dow. Third Point and Dow in November announced a truce, with Dow addingfour new independent directors to the board while the activist agreed to a one-year standstill.

Trian and DuPont have failed to reach an agreement, leading Trian to take this latest step. The firm is nominating Peltz and former GEAsset Management CEO John H. Myers, one-time CFO Arthur B. Winkleblack and Robert J. Zatta, the acting CEO ofH.J. Heinz Co.specialty chemicals firm Rockwood Holdings Inc., to the DuPont board.

"Trian believes the DuPont board has not held management accountable for continuing underperformance and repeated failures todeliver publicly stated revenue and earnings targets," the firm said. Trian also cited "excessive holding company costs" and thecomplexity and bureaucracy of the DuPont organization as reasons for waging the battle.

"Trian believes a separation would greatly increase the likelihood that the individual businesses will eliminate the operational gap versuspeers," the firm wrote. "Nevertheless, Trian does not intend this election to be a referendum on separating the businesses, but rather areferendum on DuPont's performance."

DuPont shows no sign of backing down, releasing a statement trumpeting the company's returns under current management and saying ithas no plans to break apart. The company said that it has delivered total shareholder return of 160% over the past five years, in part, dueto the company's reach and scale.

"Our businesses benefit from significant competitive advantages as part of DuPont," the company said in the statement. "The combinedpower of DuPont's science platform, our global scale, market access, and infrastructure leverage, along with our established brand andsolid financial foundation, have enabled us to deliver strong returns."

The company noted "multiple calls and meetings" between DuPont management and directors and Trian, but complained the firm "haschosen this path with the potential to disrupt our company at a key stage of execution against our plan."

DuPont has over the past year taken steps to cut costs, and last fall said it would spin its performance chemicals unit to shareholders in2015.

A Skadden, Arps, Slate, Meagher & Flom LLP team led by Lou Kling and Brandon Van Dyke are representing DuPont.


Recent News

Wintergreen eyes 2015 activism at Coca-Colaby Ronald Orol And Richard CollingsUpdated 04:30 PM, Dec-16-2014 ET

Mutual fund manager Wintergreen Advisers LLC on Tuesday suggested that a call Coca-Cola Co. (KO) had with analysts bolsteredtheir assertions that the soda giant has made a series of "failed" acquisitions and sets the stage for a continuation of its insurgency effortsin 2015.

The fund, which dabbles in activism, on Monday stepped up its 10-month-old public relations campaign at Coca-Cola, despite owningonly 0.06% of the company. Fund manager David Winters called for the replacement of Coca-Cola CEO Muhtar Kent, arguing thatpayments for Coke's top executives have been excessive "in light of the company's performance" and that the soda giant has "routinelybeen outspending its cash flow in recent years and funding the gap with debt."

In an interview with The Deal, Winters suggested that a Coca-Cola call with analysts late Monday bolstered his assertions that thecompany has a poor record under Kent when it comes to acquisitions. One such deal — the company's acquisition of the NorthAmerican bottling assets of Coca-Cola Enterprises in 2010 for $13 billion — was something Coke had promised would be a "gamechanger," Winters said.

"Now it turns out that they've tied up $13 billion in shareholder money," he said, adding that the money would likely be tied up for atleast a decade "getting 0% return."

Not mentioned on the analyst call was the company's acquisition in 2007 of Glaceau, a water and vitamin energy company, for $4.1billion. However, Winters said that acquisition too might be "worthless."

Coca-Cola declined to comment on the fund manager's claims about the two transactions. However, Coke said in an e-mailed statementthat the company "utterly rejects David Winters' claims." The company said Kent had "outlined meaningful strategic plans to acceleratesustainable and profitable growth and deliver long-term value to our shareowners."

Winters, who launched his "deep value" Mountain Lakes, N.J.-based fund in 2005, has issued over a dozen press releases raisingconcerns about Atlanta-based Coca-Cola, the first of which was one in March in which he expressed disappointment with a planCoca-Cola had that involved equity compensation for top executives that he considered dilutive to shareholders. Winters wrote tobillionaire investor Warren Buffett, a large Coca-Cola shareholder, and the Coke board raising the concern. In April, the companyreceived a substantial vote of no-confidence for its 2014 equity plan, with 17% of the "for or against" vote of shares, roughly 445million shares, voting against the plan. In addition, Buffett, who owns a 9% stake, abstained, according to people familiar with thesituation.

In October, under pressure from Buffett and institutional investors, Coke changed its pay plan to focus more on cash awards in a movethat Winters said could seriously hurt shareholder dividends, adding that cash bonuses in the plan could cost shareholders as much as$10.20 a share. "What they should have done was reduce the amount of compensation," he said.

However, Buffett told CNBC in October that the changed pay plan "makes great, great sense" and that Coke's compensation committeechief, Maria Elena Lagomisino, was "terrific" in weighing all the variables.

A Wintergreen official said that the activist has no plans to launch a proxy contest at Coke's 2015 annual meeting, which will likely takeplaced in April or May, but that other means could be employed to press his agenda. One possible approach, according to a personfamiliar with the situation, is to launch a "just vote no" campaign when it comes to Coke's annual "say on pay" vote for the top executivecompensation plans next year.

Institutional Shareholder Services Inc.'s Quickscore report, obtained by The Deal, also suggests that Coca-Cola has some pay issues,including that it grants stock awards but discloses that it only has a 12-month holding period for them. In addition, 25% of share capitalis necessary to convene a special meeting. Activists often seek special meetings to launch proxy contests and press for other changes.

In October, reports emerged that Berkshire Hathaway Inc., the Omaha-based company owned by Buffett along with 3G Capital, aBrazilian investment firm, could buy Coke in a massive $258 billion leveraged buyout. The Brazilian firm controls Anheuser BuschInBev and worked together with Buffett to acquire H.J. Heinz Co.

A leveraged buyout of Coca-Cola, however, would face a number of hurdles. First, Buffett himself reportedly said in June there was nochance of a buyout. And the math behind a potential LBO of the beverage giant is more of a glass half-empty.

Coca-Cola has close to a $180 billion market cap. A 20% premium to that would equate to a $216 billion market cap. Figuring in cash


and cash equivalents of about $20 billion and debt of about $42 billion, it would have an enterprise value of little over $200 billion at itscurrent market cap, and at a 20% premium, would have an enterprise value of nearly $240 billion, a cork-popping multiple of nearly18.5 times Ebitda.

Assuming that Coca-Cola is able to achieve $3 billion in cost savings and generates the roughly $13 billion in Ebitda that is projectedfor the fiscal year ending Dec. 31, it would be able to obtain debt financing of $96 billion, or 6 times Ebitda, to fall within what federalregulators are asking banks to limit their leveraged deal financing.

Buffett's Berkshire Hathaway could also roll its 9% stake in Coca-Cola into an LBO to get a transaction across the finish line. Evenadding $20 billion from the sale of Coca-Cola's headquarters and its Keurig stake, among other options, the equity check could still beas high as $100 billion, meaning if Berkshire-Hathaway and 3G, for example, teamed up, each would have to pitch in $50 billion unlessother partners were found to participate, or additional means of financing were secured.

Change may be in the offing at Coca-Cola if Wintergreen keeps the pressure on, as the fund is not a complete stranger to activism. In2009 and 2010, it launched two consecutive proxy fights at Florida-based Consolidated-Tomoka Land Co. (CTO), a company with a$307 million market capitalization. In 2009, Wintergreen succeeded at getting two dissident nominees elected to the board and in 2010the two sides settled to add one additional activist nominee. In 2011, Wintergreen suggested a candidate that the management acceptedso no proxy contest was necessary, according to a spokesman for the activist. Their efforts eventually succeeded at removing thecompany's CEO and CFO.

"There are a lot of similarities between the old Tomoka and Coca-Cola: management running a business to maximize their pay packagenot for fiduciary duty for all shareholders, Winters said. "At Tomoka, there was improved governance and new management team andapproach. Now Tomoka and Wintergreen have a good relationship." In addition, the company declassified its board after shareholdersapproved a binding proposal to do so.

Winters had previously worked for high profile value investor Michael Price.


Recent News

Wintergreen Advisers steps up Coke campaignby Ronald OrolUpdated 11:10 AM, Dec-16-2014 ET

Mutual fund Wintergreen Advisers LLC stepped up its 10-month-old activist campaign at Coca-Cola Co. (KO) on Monday, raisingconcerns about the soda giant's "failed" acquisitions, "bad" compensation plans and weak governance.

The insurgent, which has a 0.06% stake in the company and is managed by David Winters, has called for the replacement of Coca-ColaCEO Muhtar Kent. He has outlined a series of recommendations intended to boost the company's stock price and ensure that thecompany's "50-year record" of dividends stay in place. The activist fund said payments for Coke's top executives has been excessive "inlight of the company's performance," adding that the cola company has "routinely been outspending its cash flow in recent years andfunding the gap with debt."

Winters, who launched his "deep value" Mountain Lakes N.J.-based fund in 2005, has issued over a dozen press releases raisingconcerns about Atlanta-based Coca-Cola, the first of which was in March when he expressed disappointment with Coca-Cola's equityplan.

The fund is not a complete stranger to activism: In 2009 and 2010, it launched a campaign at Consolidated-Tomoka Land Co. (CTO)that included a proxy fight. According to FactSet, the proxy fight was settled in 2010 when the company agreed to nominate thedissident nominee and recommend that shareholders vote in favor of the dissident proposals to adopt a majority vote standard in directorelections and approve a "say on pay" proposal. Winters had previously worked for high-profile-value investor Michael Price.

Winters' campaign at Coca-Cola began with an effort earlier this year to press the company to change its executive compensation plan,which he said he considered dilutive to shareholders. Winters wrote to Warren Buffett, a large Coke shareholder, and the Coke boardraising the concern. In October, under pressure from institutional investors, Coke changed its pay plan in a move that Winters said was"outrageously excessive and inconsistent" with past plans. "Much more work has to be done to revitalize Coca-Cola and restore trust inthe company," Winters said in October.

Institutional Shareholder Services' Quickscore report, obtained by The Deal, suggests that Coca Cola has some pay issues, including thatthe company grants stock awards but discloses that it only has a 12-month holding period for them. In addition, 25% of share capital isnecessary to convene a special meeting. Activists often seek special meetings to launch proxy contests and press for other changes, ISSsaid in the report.

Coca Cola said, in an e-mailed statement, "We utterly reject David Winters' claims." The company said Kent had "outlined meaningfulstrategic plans to accelerate sustainable and profitable growth and deliver long-term value to our shareowners."

In October, reports emerged that Berkshire Hathaway Inc., the Omaha-based company owned by Buffett and 3G Capital, a Brazilianfirm owned by three billionaires, could buy Coke for $258 billion.

The Brazilian firm controls Anheuser Busch InBev, and they worked together with Buffett to acquire H.J. Heinz Co.


Recent News

A requiem for the LBOby Bob O'BrienUpdated 12:20 PM, Nov-07-2014 ET

R.I.P. the LBO.

Everybody in the investment community agrees: the public-to-private model that the private equity world thrived on for years is dead.Morte. Toast.

In a land of plenty — PE firms sit on a collective cash horde of $1.2 trillion, while the M&A market overall is set to bust 2007 recordswith a projected $1.5 trillion deal value total in 2014 — leveraged buyouts have withered on the vine: just $3 billion were recorded inthe first half of the year.

The question is: what killed it?

It was, after all, a formidable structure, one that the self-styled smartest guys in the room honed to razor-sharp perfection over the pastthree decades. That rang up $275 billion in deal values at its peak in 2007, when it accounted for 25% of M&A transaction volume. Thatstill did a respectable $80 billion in value last year. That has now fallen to an ignominious $6 billion run rate this year? Or as Pitchbook,in its second-half 2014 PE survey noted, "Buyout activity at the highest end ($5 billion and up) virtually ceased in the first half."

The culprit: price.

Or, perhaps more accurately, PE firms' reluctance to pay the going price.

Last month, after Danish chemicals company Auriga Industries AS put its Cheminova pesticides unit on the block, the asset attractedinterest from U.S. buyout firms. The duo of EQT Partners and CVC Capital Partners Ltd. stepped up with an offer of $1.3 billion —only to be outbid by FMC Capital, which sealed the deal with a bid of $1.8 billion, including debt. On the face of it, a 38% premium tothe PE firms' offer.

In May, Kohlberg Kravis Roberts & Co. LP (KKR) unleashed a bid of $2.9 billion for Australia's Treasury Wine Estates Ltd., theworld's second-largest wine maker. Treasury Wine, which is listed on the Australian Securities Exchange, was coming off a disastrousperformance, when it misjudged the market for cheaper wines and ran afoul of Chinese government officials. Treasury Wine, despitereeling from its strategic misjudgments, said it would pass on the bid, believing it could wring more value using its own resources,which included a new CEO. Treasury Wine said it could do better by, in effect, buying itself. (The final gong on the deal may not havesounded, as KKR in August came back with a sweeter, $3.15 billion bid in conjunction with Rhone Group LLC, and luring TPGCapital, which has advanced its own equivalent bid, into the fray.)

There's also evidence that strategic buyers are making what are effectively preemptive bids for assets, setting a market with theiroriginal offer, rather than going through the haggling during an auction.

In February, British medical device maker Smith & Nephew plc (SNN) agreed to pay $1.7 billion to buy Austin, Texas-based andNasdaq-listed ArthroCare Corp. The transaction was widely expected to attract competing bids. In fact, none emerged.

ONE LITMUS TEST that may be percolating in the strategics-versus-PE turf war involves Kuwait Food Co., a restaurant and foodproducts company traded on the Kuwait Stock Exchange. Better known as Americana, the company operates KFC and Pizza Hutrestaurants in the Middle East. Its owners hired investment bankers earlier this summer to explore options for the company.

Savola Group, Saudi Arabia's largest food producer, with a market value of $12 billion, is reported to be in negotiations to take amajority stake in Americana. However, KKR, in conjunction with CVC, is reportedly bidding on the asset, and TPG is also said to bemaking an offer.

As price talk for Americana creeps up near $4 billion, it will be telling if the financial sponsors drop out.

There's no disputing that price has been an overriding consideration in investments. As Leon Black, the chief executive of the privateequity giant Apollo Global Management LLC (APO), said on a conference call in August, "We believe purchase price is one of thegreatest determinants of investment performance."

And according to S&P Capital IQ LCD, the average market multiple in mid-2014 reached 13 times enterprise value to Ebitda, a fullpoint above where it was at the same point a year earlier, and the highest it has been since the peak of the merger boom in early 2008,before the financial crisis crippled the M&A market.


At those multiples, the equity contribution from a PE firm starts to become untenable. Even leveraging a deal up to the highest levels themarket allows, DealLogic estimated that PE firms are having to make a 45% equity investment to close deals. On a $2 billionacquisition, that total comes to $900 million; on a $5 billion deal, it zooms to $2.25 billion.

Strategic buyers, on the other hand, operate under no such constraints. With their public market values inflated by the equity market'srun to record levels, corporations have a valuable currency in their own stock. And sitting on huge reservoirs of capital after having gonethrough a lengthy process of off-loading noncore assets over the previous four years, while hoarding cash by being penurious aboutcapital spending, strategics have the advantage of being able to strike all-cash deals.

All this without having to endure the scrutiny that limited partners subject PE firms to. (Of course, strategics have boards they have toconvince, but boards arguably haven't proved as willful as limited partners — activist shareholders might represent a bigger thorn.)

That's helped push some PE firms into taking minority stakes in assets, rather than executing outright purchases, as Blackstone GroupLP (BX) did in February with its investment in Gianni Versace SpA. The firm paid $287 million for a 20% stake in the fashion house,rather than bite the whole $1.4 billion at which the investment valued Versace.

Trends also have pushed PE firms into transactions other than public-to-private deals. Sponsor-to-sponsor deals, though not alwaysembraced by limited partners, have remained just as popular. Carve-outs of corporate assets, which don't qualify as LBOs under theconventional definition, also have surged.

In February, industrials conglomerate Danaher Corp. (DHR) teamed up with Blackstone to bid for the water technologies assets ofchemicals maker Ashland Inc. (ASH). The asset ended up going to Clayton Dubilier & Rice Inc., which paid $1.8 billion for theoperation, subsequently renamed Solenis.

Similarly, Danaher, again pairing up with Blackstone, bid on the diagnostics unit that Johnson & Johnson (JNJ) was selling, only to loseout to Carlyle Group LP (CG), which paid just over $4 billion for the asset. Though competitive, and pitting strategic players againstfinancial bidders, these carve-outs aren't counted as LBOs.

Combining carve-outs with sponsor-to-sponsor deals, the value of such transactions increased more than 150% in the first half of 2014,S&P said, with a deal value that reached $89 billion. That would put those kinds of deals on pace to break the record of $172 billion insuch transactions recorded in 2007.

PRIVATE EQUITY FIRMS also have evinced a greater appetite for middle market deals. According to Pitchbook data, middle markettransactions have accounted for 83% of all buyout activity. That's not only the first time that the figure has topped 80%, it's the first timethat it's gotten significantly above 70% of transaction volume, which is where it stood last year, for a full year.

"The public to private transactions are much harder to execute, at least the large ones," Steven Kaplan, a professor at University ofChicago's Booth School of Business, said in an interview. Prospective buyers are getting less information during the due diligenceprocess and are subject to more scrutiny, both from regulators and from litigious participants in the transactions, he said. "The largepublic-to-private deals are just hard to do in a way that gets PE firms the returns that they want," Kaplan added.

Meanwhile, the unwelcome outcomes of some pre-financial crisis vintage big-ticket deals — not the least of them the ingloriouscollapse of Energy Future Holdings — havve confirmed its status as the deal that never should have happened, while also having achilling effect on megadeals among PE firms.

And the kind of club deals that created the TXU disaster, in which a consortium of PE firms work cooperatively to purchase an asset,have been much tougher to execute in the wake of the government's prosecution of PE firms for collusion.

Instead of partnering with each other, PE firms are competing for transactions. Which is what prompted Hamilton James, Blackstone'spresident, to say in January, "It is frustration for our guys to keep going after things and keep getting outbid." And he meant outbid, notby strategic buyers, but by other PE firms.

Despite all the talk of the death of the public-to-private transaction — an assertion trumpeted in September by Goldman Sachs GroupInc.'s (GS) famous "Where have all the LBOs gone" broadside — there's some question as to whether the "death" of PE is all that it'scracked up to be.

For one thing, the year-over-year comparisons, which make this year's LBO activity look anemic compared with 2013's total, are a bitskewed by the two biggest LBOs of last year — and Dell Inc. — which effectively comprised 65% of the deal value forH.J. Heinz Co.all the year's LBOs.

Both those deals were completed with some atypical financing arrangements — the use of Berkshire Hathaway Inc. (BERK.A) preferredstock in the Heinz purchase, and the contribution of mezzanine financing from Microsoft Corp. (MSFT) in the Dell takeout — that makethem look like anything but conventional LBOs.

It's not as if LBOs have actually, in dodo-like fashion, vanished from the landscape. Just about the time Goldman was reading the last


rites over the LBO market's limp form, Thoma Bravo LLC announced its $2.5 billion purchase of Compuware Corp. (CPWR). Shortlythereafter, Vista Equity Partners unveiled its $4.3 billion acquisition of Tibco Software Inc. (TIBX). Those transactions give thepublic-to-private market a couple of big scores.

Of course, a smattering of sub-$5 billion technology deals isn't going to be enough to make a reality of the mythical $100 billion LBOthat, back in 2007, had bankers' saliva glands working overdrive. (Dell once had a market cap of more than $100 billion, but got takenout at a trifling $24 billion.)

Even the champions of the PE business seem to have thrown in the towel on the public-to-private model. Consider: the panel thattheAssociation for Corporate Growth titled "Castaway" and staged at a conference in late August advanced the question, "Is it time toabandon the LBO model?"

The panel's title relegates LBOs to the ranks of either Wilson, Tom Hanks' cinematic volleyball companion, or Gilligan and the Skipper.

Sure, some changes — such as the demise of expansive club deals — might be considered structural in nature. Others, however, aresimply cyclical. As Leon Black said in the second part of his comment about pricing, "If [high prices] means waiting longer foropportunities, we will happily wait."

Besides, the demise of the LBO market has been heralded before. A Google search of "the death of the LBO market" turns up newsheadlines from 1989 and 1999, as well as 2009, all touting the passing of public-to-private deals. (Is the LBO market like some all-newsradio format that promises traffic and weather on the 9s?)

As to whether LBOs are, in fact, morte, toast or any of the other euphamisms for dead, Chicago's Kaplan, who said he believes manychanges are structural, insisted, "The caveat is that, at some point, PE firms will once again do the large deals, if only to put some of thatmoney to work."


Recent News

Snow Phipps wins PE-backed Teasdale Foodsby Sarah PringleUpdated 03:20 PM, Oct-29-2014 ET

New York private equity firm Snow Phipps Group LLC has emerged as the winning bidder for Teasdale Foods Inc., the provider ofHispanic canned food products that was acquired only three years ago by Palladium Equity Partners LLC.

Terms of the transaction, which closed on Tuesday, weren't disclosed but a source familiar with the process said Snow Phipps paidaround 10 times the target's about $20 million in revenue, implying a deal valued at roughly $200 million.

The auction process included financial players that wanted to enter the burgeoning Hispanic food category and felt they could fueladditional growth in Teasdale, the source said.

The Deal reported in late July that New York PE firm Palladium was shopping Teasdale, which it acquired on Sept. 20, 2011, for anundisclosed sum.

Teasdale, which is based in Atwater, Calif., provides conventional and organic canned hominy, beans and sauces in the West andMidwest through the Teasdale and Aunt Penny's brands.

Since gaining backing from Palladium, Teasdale has grown partly via acquisitions.

On Sept. 6, 2012, Teasdale acquired Hoopeston, Ill.-based Hoopeston Foods Inc., adding a conventional and organic canned dried beanssupplier serving the Midwest market. Financial terms of the deal weren't disclosed.

Teasdale then bought Zateca Foods LLC and Greeley Trading Co., suppliers of pre-cooked dehydrated beans, on Dec. 19, 2012, for anundisclosed sum.

On July 25, 2013, Palladium announced the recapitalization of Teasdale, revealing that the portfolio company executed a $94.5 millionsenior secured credit facility, $34 million of which was returned to Palladium investors via a dividend.

Other players offering similar products to Teasdale include B&G Foods Inc. (BGS), which offers canned bean products under its Joan ofArc brand; Campbell Soup Co. (CPB), with complementary products such as its canned soup; and ConAgra Foods Inc. (CAG), whichoffers Southwestern-style canned bean variations via its Ranch Style Beans brand as well as Dennison's canned chili.

Recent activity in the space includes Jalisco, Mexico-based canned food company Conservas La Costeña SA de CV's Aug. 4 agreementto buy Minneapolis-based Faribault Foods, a provider of canned vegetables, sauced beans, refried beans, baked beans, among otherorganic and Mexican products. Terms of the deal weren't disclosed.

GraceKennedy Ltd., the Caribbean food and financial service conglomerate based in Kingston, Jamaica, extended its presence in theU.S. by acquiring Hispanic-focused food distributor La Fe Foods Inc. for $26 million on Aug. 7. La Fe has offices in Moonachie, N.J.,Raleigh, N.C., and Medley, Fla.

Teasdale CEO Alberto Bandera will continue to lead the company, while Snow Phipps operating partner Peter Shea will join Teasdaleas non-executive chairman of the board.

Shea previously served as managing director of in Europe and currently serves as the non-executive chairman ofH.J. Heinz Co.FeraDyne Outdoors LLC, the archery accessory company Snow Phipps won on April 29 following a robust auction process. Terms ofthat deal weren't disclosed.

For Palladium, the sale of Teasdale comes on the heels of the Aug. 7 sale of Sahale Snacks Inc. to J.M. Smucker Co. (SJM) for anundisclosed price. Sources at the time said J.M. Smucker likely paid as much as $150 million, or as high as 3 times the $50 million insales generated by the provider of premium, all-natural dried fruit and nut blends

Weil, Gotshal & Manges LLP's Sarah Stasny, Andrew Arons, Adam Dickson, Andrew Colao, Kristopher Villarreal, Alana St. Aude,Rachel Trudeau, Emily Aguilar, Marc Silberberg, Mark Dundon, John O'Loughlin, Michael Nissan, Verity Rees, Lawrence Baer, AryehZuber, Joseph Verdesca, Gabriel Gershowitz, David Litvack, Jeffrey Osterman, Rachel Vigneaux, Vadim Brusser and AlexisBrown-Reilly provided legal counsel to Snow Phipps on the Teasdale transaction.

Harris Williams & Co.'s Tim Alexander, Glen Gurtcheff, Brant Cash and Michael Gilkes supplied financial advice to Palladium.


Officials with Snow Phipps, Palladium and Teasdale declined to comment.


Recent News

Ahead of the newsEdited by Michael D. BrownUpdated 05:15 PM, Sep-16-2014 ET

This report is an exclusive compilation of advance intelligence gathered by The Deal Pipeline's editorial staff. Today's highlightsinclude:

Atlantic Power balks at sale

Don't ring the death knell yet on LBOs

Lambert cleverly gives Sears a short-term loan

Lilly, AstraZeneca partner on Alzheimer's drug

Revel ready for auction

Petropavlovsk plans share sale to fund debt revamp

From Tuesday's First Take: Allergan

The full report follows.

Atlantic Power balks at sale

Though Atlantic Power Corp., said Tuesday it had completed its strategic review without a sale of the whole company, industryobservers said there was still a potential for the independent power producer to sell all or part of its business. The Boston-basedcompany said in its statement that it would continue to assess other potential options, including asset sales or joint ventures. GoldmanSachs & Co. and Greenhill & Co. are advising the company in its review process. Potentially still on the table is all or part of Atlantic'srenewable energy portfolio, industry experts said. The company, which owns and operates a fleet of power generation assets in theUnited States and Canada, has a 1,117 megawatt renewable generation portfolio. In total, the company has 2,945 MW of generationcapacity, in which its aggregate ownership interest is approximately 2,024 MW. Its power generation projects span 11 U.S. states andtwo Canadian provinces. Full report

Don't ring the death knell yet on LBOs

Goldman, Sachs & Co. penned an obituary for the leveraged buyout last week, and effectively assembled a pyre for the remains of theprivate equity business. Leveraged buyouts — the stock-in-trade of private equity — is a business that's died, Goldman insisted in itsreport titled "Where Have All the LBOs Gone?" In an era when the merger market is percolating — up 60% this year over last,Goldman said — the growth in PE-sponsored deals had shrunk to a nubbin, boasting a puny 6%t increase. Overall, in the take-privatetransactions where PE ought to be dominating, private equity struck an inglorious total of just $3 billion worth of transactions so far thisyear, after having logged $80 billion in such transactions last year, a year that included the $25 billion sale of Dell Inc., purchased inpart, by Silver Lake Partners, the $23 billion takeout of , partly by Berkshire Hathaway Inc. and 3G Capital, and the $7H.J. Heinz Co.billion buyout of BMC Software Inc., by a consortium led by Bain Capital. 2014, by contrast, sees its list topped so far by Golden GateCapital Partners' $2.1 billion deal for Darden Resturants Inc.'s Red Lobster chain. Full report

Lambert cleverly gives Sears a short-term loan

In a deft and creative move, Sears Holdings Corp. CEO and Chairman Edward Lampert is providing the struggling retailer with a $400million short-term loan from the affiliates of the hedge fund he controls. The loan is priced at 5% and is scheduled to mature on Dec. 31.The maturity date can be extended to Feb. 28, if the company hasn't defaulted on the loan and pays a 0.5% extension fee. "When was the


last time you saw a three-month piece of paper issued?" said David Tawil, a co-founder and portfolio manager at distressed hedge fundMaglan Capital LP. "It's very unconventional." Tawil said the short-term nature of the loan is a positive. "I think it's a pretty safe pieceof paper," he asserted. "It bears almost no risk." Full report

Lilly, AstraZeneca partner on Alzheimer's drug

Eli Lilly and Co. is betting up to $500 million that AstraZeneca plc has a winner in its potential Alzheimer's treatment AZD3293.Indianapolis-based Lilly and the U.K.'s AstraZeneca plan to co-develop and commercialize the drug candidate, now in Phase 1, theparties said Tuesday. The agreement calls for Lilly to pay an initial milestone of $50 million and up to $450 million in furtherdevelopment and commercial milestones. Lilly would lead the clinical development, working with researchers from AstraZeneca'sneuroscience unit. The latter would be responsible for manufacturing, and the two would share responsibility for commercialization,plus all future costs for development and net global revenues. Full report

Revel ready for auction

Revel AC Inc. has secured approval of its bidding procedures over the objections of a U.S. trustee and the operators of restaurants,nightclubs and spas at its Atlantic City, N.J., hotel and casino. Judge Gloria Burns of the U.S. Bankruptcy Court for the District of NewJersey in Camden on Monday, Sept. 15, signed an order sanctioning sale procedures that name Polo North Country Club Inc.stalking-horse bidder. Polo, controlled by Florida developer Glenn Straub, has offered $90 million in cash for the debtor's property.Under the bidding procedures, competing bidders have to offer at least $94 million by Sept. 23. If the company received at least onecompeting offer, it would hold an auction the next day, at which bids would have to increase in increments of at least $1 million. Polowould receive a $3 million breakup fee if it were beat out at auction. A sale hearing is scheduled for Sept. 30. Full report

Petropavlovsk plans share sale to fund debt revamp

Russian gold mining company Petropavlovsk plc heaped more bad news on its long-suffering investors on Tuesday, announcing plans tosell shares to fund payments to bondholders and an unnamed senior lender in a bid to unblock debt restructuring talks. TheLondon-listed company said it had made progress toward a restructuring deal after senior lenders had "indicated" they will waivecovenants that stood in the way of a restructuring of $310.5 million of convertible bonds. Petropavlovsk plans to hand investors newconvertible bonds maturing in 2019 in exchange for existing 2015 bonds and include a sweetener in the form of cash. The size of thepayment to both bondholders and the senior debtor will depend on the size of the company's proposed equity rights issue. Full report

From Tuesday's First Take: Allergan

ALLERGAN AGREES TO SPECIAL MEETING [AGN, VRX]: Botox maker Allergan Inc. [AGN] said late Monday that it hadreached a settlement with its pursuer Valeant Pharmaceuticals International Inc. to hold a previously scheduled special shareholdersmeeting on Dec. 18, but this time without restrictions the company had been trying to impose on who could vote. Allergan was insistingthat shares eligible for voting privileges had to be held as of the time of the special meeting. In return, Valeant and backer PershingSquare Capital Management LP are dropping their lawsuit in Delaware Chancery Court. Still outstanding, however, is Allergan's suitagainst Valeant and Pershing Square in California federal court claiming that the suitors violated securities laws, including insidertrading rules, when they mounted their $51 billion bid for the company. The California court is holding a hearing on Oct. 28--Allerganhas set Oct. 30 as the record date for the special shareholders meeting.

RACKSPACE TERMINATES SALE TALKS [RAX]: From Chris Nolter — Shares of Rackspace Hosting Inc. plummeted $7.09, or18%, to $32.25 after hours on Tuesday after the company said it had terminated sale talks. Earlier this year, the San Antonio hostingcompany said it had hired Morgan Stanley and Wilson Sonsini Goodrich & Rosati to explore options, after it received overtures fromunnamed entities. Rackspace also promoted President Taylor Rhodes to CEO. The company said that its business had begun to turnaround, and that second-quarter growth of 4.3% was the highest since the fourth quarter of 2012. Rackspace has been on The Deal'swatch list of companies that could be the target of an activist campaign or a takeover attempt since late January. Full report


Recent News

Sense of the markets: Don't ring the death knell yet on LBOsby Bob O'brienUpdated 02:55 PM, Sep-16-2014 ET

Goldman, Sachs & Co. penned an obituary for the leveraged buyout last week, and effectively assembled a pyre for the remains of theprivate equity business.

Leveraged buyouts — the stock-in-trade of private equity — is a business that's died, Goldman insisted in its report titled "Where HaveAll the LBOs Gone?"

In an era when the merger market is percolating — up 60% this year over last, Goldman said — the growth in PE-sponsored deals hadshrunk to a nubbin, boasting a puny 6% increase. Overall, in the take-private transactions where PE ought to be dominating, privateequity struck an inglorious total of just $3 billion worth of transactions so far this year, after having logged $80 billion in suchtransactions last year, a year that included the $25 billion sale of Dell Inc., purchased in part, by Silver Lake Partners, the $23 billiontakeout of , partly by Berkshire Hathaway Inc. and 3G Capital, and the $7 billion buyout of BMC Software Inc., by aH.J. Heinz Co.consortium led by Bain Capital.

By contrast, 2014 sees its list topped so far by Golden Gate Capital Partners' $2.1 billion deal for Darden Resturants Inc.'s Red Lobsterchain.

What's worse, of course, is that PE is going starving in a land of plenty. Dry powder at PE firms climbed to a record total of $1.14trillion by June, according to Preqin.

What's to be made of such wastrels? Such slackers? Such malingerers?

Well, for one, we could hesitate before we go all in on the LBO is dead meme.

Implicit in Goldman's analysis is that private equity firms have watched as a party has broken out in the merger arena, and chosen to sitthis one out.

Not so, says private equity.

"I think it's interesting that Goldman is basing its analysis on the dollar value of the deals that have been done, rather than on the numberof transactions," said Pam Hendrickson, chief operating officer at Riverside Co., and the past global chairwoman of the Association forCorporate Growth, an industry group of middle market private equity managers and bankers.

"Dollar value" proved to be Goldman's biggest bugaboo. It said there have been no LBOs with a deal value of $5 billion or more,compared with as many as 17 in 2007, the prior high in the merger market. It can be argued as to whether that's even the case. For onething, a number of transactions, including Albertsons LLC's $9 billion purchase of Safeway Inc., was categorized by Standard & Poor's,Goldman's data source, as a strategic transaction. This despite the fact that Albertson's is backed by Cerberus Capital Management.

"The reality is that as many deals in the middle market have gotten done so far this year as were done in the second half of last year,"Hendrickson said in an interview. The majority of deals — as many as 90% of PE transactions, according to data Hendrickson has seen— are $400 million or smaller. "There's quite a lot of action in the middle market."

This isn't to say the emphasis on size is irrelevant. It's just that it's not necessarily an indictment of the PE model that knee-bucklingmegadeals aren't getting done. High-dollar transactions can be a function of the assets being exchanged. But they can also be a result ofprice. You get to eye-popping deals by over paying.

Everybody agrees that multiples have surged, as the rise in the value of public companies has inflated valuations, and conflated whatCEOs think their assets ought to command.

It's a dynamic that PE firms have taken advantage of, as research showed that redemptions hit record levels this year. But while they'reselling everything that's not nailed down — a turn of phrase that's become increasingly commonplace — PE firms have shown morerestraint on the deal-making end.

But is even that necessarily true? "I think we're seeing a lot of PE funds financing management in transactions and takeovers," saidRichard Schmitt, chief executive of AccuVal-LiquiTec, an appraisal and liquidation firm that consults on mergers, includingPE-sponsored transactions. What category do those go in? It's clear Goldman doesn't count them as sponsored transactions.


Then there's the endemic lack of transparency in private equity transactions. Sponsor-to-sponsor transactions are, by nature, privatetransactions, so their values aren't reported, and thus impossible to count.

Transactional value matters more to banks than to buyers and, to a lesser extent, sellers. And Goldman, which is hurling these brickbats,is a bank. Strategic buyers can afford to pay up for expanding multiples, because the easy credit backdrop gives them a cushion. PEfirms, with well-established return expectations, have to show more discipline. It may aggravate banks that big deals are disappearing.But it doesn't mean it's time to fit PE for a toe tag.

"We're still focused on the low and middle market," Hendrickson said. "It's a very different dynamic there."


TheDeal Report H.J. Heinz Co.

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