Beyond Meat M&A Pitchbook Case
M&As are expected to increase to overcome the poor performance of the Organic Food Industry. Through mergers and acquisitions of existing companies, existing ones have succeeded in promoting sales. Although many M&As have been used to reduce operating costs, innovations, which make a chance for long-term sustainability, need to the current food companies. In the current Organic market, the alternative meat market was judged to be the Niche market. Kraft Heinz, which has a global market distribution chain besides the U.S. market, also seems to have an advantage in securing an alternative meat market share after the merger.
- Part 1. Investment Rationale
- Part 2. Target Company Overview: Operation
- Part 3. Target Company Overview: Financial
- Part 4. Target Industry Overview: Nutrition and Supplements Market
- Part 5. Valuation Overview
Kim, Nam Il
Finance Project Member
FCB Finance Institute
Concentration Area: M&A Advisory
Finance Project Portfolio
Part1. Investment Rationale
Heinz’s acquisition of Beyond Meat can offer significant cost reductions for both Heinz and Beyond Meat. It reduces fixed costs, SG&A expenses, and Cost of Goods Sold. On the other side, Heinz and Beyond Meat should produce premium food products to survive in the F&B industry down the road. That is, the acquisition provides the revenue synergies allowing them to take 16% of market share among the U.S alternative market. BYND’s production patent and expanding products can make premium products with Boca Burger(Own by KHC).
Part2. Target Company Overview: Operation
Beyond Meat operates as a No.1 global alternative meat producer. As part of this, Beyond Meat increases dramatically its market share not only In North America but also in the Asia Pacific and Europe. Beyond Meat already has its global market partner in across 40 countries. In the US market, Beyond Meat has 8% of market share, which is the fastest growth velocity in the US alternative meat market. BYND’s products are Non-GMO food and have certification from the Vegan Action Foundation.
Part3. Target Company Overview: Financial – Top Down Approach
Beyond Meat’s Sales increased by 266% in 2018 on year. It has been benefited from the boom of the Fresh Platform Sales, which give consumers a better taste. To us, one of the interesting questions of Beyond is ‘How much will the company’s value be’. We answer this question by using two analyses, one top-down, the other bottom-up. Estimations are conservative with the market-based approach.
Part 4. Target Industry Overview: Nutrition and Supplements Market
The global alternative meat market cap is projected to be $140 billion in 2029. Securing a global market share is essential in the company’s long-term strategy. The Asia-Pacific region would exhibit the highest CAGR of 9.4% during the forecast period, 2018-2025.
Europe dominated the global meat substitute market in 2017, accounting for 38.5% of the total revenue.
It is also important to secure a market share in Asia, where rapid growth is expected, and in Europe, where it has the largest revenue.
Part5. Valuation Overview – Valuation After M&A
With KHC’s Marketing chain supply and Value chain, we can assume that After M&A BYND could get much more market opportunities. Market Penetration is one of the most powerful synergies that BYND can get. 1) US Food-at-Home: Terminal penetration could be higher than before up to 90% of the total market share 2) US/Canada Away-from-Home: Higher opportunity, especially in Burger QSR & Fast Casual, could make $2,364 Million in 10-years Cash Flow. 3) International Food-at-Home Opportunity: Worldwide value chain which KHC get for years of operation help to get more revenue from European countries up to $2,798 Million. By all accounts, we can calculate the Synergy effect as $5Billion which can make $275 per share for a decade
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