PERRIER, NESTLÉ, AND THE AGNELLIS

Gulleroglu|Mbewe|Shkreta|Secilmis

24 April 2013

Summary

Perrier S.A, the world’s largest mineral water company is facing financial and reputational difficulties due to a recent scandal where benzene was found in its products

The prominent Italian family The Agnelli’s, who own Fiat SpA, see the opportunity to take over Perrier They are bidding indirectly through two French companies, Exor who has 35.5% of controlling votes in Perrier and Saint Louis who owns

13.8% of the Perrier stock in the form of Treasury stock The Swiss-based food giant Nestle and its French ally BSN (future DANONE) contest the bid and are interested in acquiring Perrier as well

Nestlé's advancement for Perrier was simultaneous/coordinated with BSN bid for Exor

Nestlé's chances, at first sight, seem limited. The Agnelli’s nearly control 50% of Perrier

Furthermore Nestle filed two lawsuits in France

1- It asks the authorities to look at Exor’s control stake because they have breached the law 2- It asks for the nullification of the share sales to Saint Louis

The European competition authorities will have a close look at the merger because Nestle/Perrier would control 56% of the mineral water

market. Combined with BSN the market control shoots-up at 82%

Blueprint of events

1989 - Exor increase control stake in Perrier to 35.5%. Prior to the increase it owned 23.7%

19/01/1990 – Benzene scandal Share price drops to FF 1200 from FF 2000 Profits from Perrier mineral water business decrease by 21%

06/1990 – Jacques Vincent, Chairman of Perrier, replaces Gustave Leven as Perrier Chairman

11/1991 – IFINT launches a friendly bid of FF 1320 for 2/3 of Exor with the backing of the Mentzelopoulos family

03/01/1992 - Saint Louis acquires 13.8% of Perrier

13/01/1992 – Nestle announces that it is interested to bid for Perrier

20/01/1992 – Nestle and Banque Indosuez make a full bid for Perrier at FF 1475

21/01/1992 – Perrier refuses Nestlé's and Banque Indosuez bid

21/01/1992 – Nestle starts two court proceedings One against the right to vote of Exor The other against the sale of treasury stock to Saint Louis

21/02/1992 – BSN makes a hostile bid for Exor at FF 1420 per share

26/02/1992 – Exor rejects BSN offer

26/02/1992 – Exor forced by French courts to launch a full bid for Perrier or a 2/3 bid at 2% premium over Nestlé's offer

27/02/1992 – Exor makes an unconditional offer for 100% of Perrier at FF 1475

AGNELLI FAMILY

IFINT

EXOR

35% 5% 15% 10% 35%

BANQUE INDOSUEZ

MENTZELOPOULOS FAMILY

CREDIT AGRICOLE

PUBLIC

100% LAZARD FRERES

IFIL

100%

BSN

5.8% 6.8%

SAINT LOUIS

6.5% 36%

WORMS et CIE

PERRIER

SOCIETE GENERALE

OMNICO

51% 49%

LEVEN FAMILY

PUBLIC

6.7% 28.8% 8.5% 13.8% 18% 24%

Ownership structure

AGNELLI FAMILY IFINT

EXOR

35%

100% IFIL

100%

SAINT LOUIS

6.5% Control

WORMS et CIE

OMNICO

49%

6.7% 28.8% 13.8%

PERRIER

7.4%

Agnelli Family indirect shareholding in Perrier

Agnelli’s control and capital in Perrier

Control Rights

IFINT = 11.23% control rights over Perrier

Exor: 35%*28.8% = 10.08%

OMNIC: 35%*49%*6.7% = 1.15%

IFIL = 1.49% control rights over Perrier

Saint Louis: 6.5%*13.8% = 0.9%

Worms et Cie: 7.4%*57.5%*13.8% = 0.59% (based on the assumption that control rights in Saint Louis equal 57.5%)

Therefore the Agnellis control 12.72% in Perrier

Capital

Total Capital in Perrier as of 1991: FF 449,153,000

Exor: 10.08%* FF 449,153,000 = FF 45,274,622.40

OMNIC: 1.15%* FF 449,153,000 = FF 5,165,259.50

Saint Louis: 0.9%* FF 449,153,000 = FF 4,042,377

Worms et Cie: 0.59%* FF 449,153,000 = FF 2,650,002.70

Therefore the Agnellis own in total FF 57, 132,261.60 capital in Perrier

Agnelli Family problems with control of Perrier

No direct ownership in Perrier, 49.3% ownership is through allies. Therefore the Agnelli family relies on its allies to obtain control of Perrier

Allies can change allegiances, e.g. Lazard and BSN

The two lawsuits concerning Exor and Saint Louis' ownership can change the Agnelli family's percentage ownership and control of Perrier

If the lawsuits are won by the Agnelli Family, they will have 49.3%

If Exor loses the lawsuit, Exor may lose its voting rights in Perrier and Nestlé's chances of winning a bid for Perrier improve

If Saint Louis loses the lawsuit, the Agnelli Family will lose 13.8% control in Perrier and have only 11.23% control rights in Perrier through IFINT

They face opposition from minority shareholders – in both Exor and Perrier

The Agnelli’s could maintain control of Perrier and reach a majority shareholding through market operations if they do not loose the lawsuits filed by Nestle

EXOR

5% 10%

BANQUE INDOSUEZ CREDIT AGRICOLE LAZARD FRERES

BSN

6.8%

PERRIER

28.8% 8.5%

2.4%

Nestlé's Allies

Banque Indosuez – No direct shareholding in Perrier. Motivated by desire to maintain minority shareholder power in Perrier (i.e. keep Agnelli Family shareholding low)

Lazard Freres – Previous relationship with the Agnelli Family. Motivated by threat of BSN takeover by the Agnelli family

BSN – Previous relationship with the Agnelli Family. It is agree that they will takeover the Volvic brand from Nestle if Nestle’s bid for Perrier is successful. Motivated by fear of competition from the Agnelli Family in mineral water industry in France

Credit Agricole – Supports Nestlé's bid for Perrier

Nestlé's Alliance

Nestle is relying on alliances with former Agnelli allies

Nestlé's bid has been approved by the French Finance Ministry and is structured to avoid competition concerns – BSN to purchase Nestlé's Volvic brand

Allies are well connected in France e.g. Bank Credit Agricole The allies are motivated by a dislike of the Agnelli family They could easily turn on Nestle as soon as their interests change The Agnelli Family holds 6.8% of BSN (through IFIL), Exor (which is effectively controlled by the Agnelli Family) holds 2.4% of Banque

Indosuez and the Agnelli Family has a seat on Lazard's board so there is some conflict of interests

Through its alliances, Nestle has the support of 12.9% of the shareholding in Perrier

This may not be able to be of significant influence over Perrier for Nestlé's benefit Option to purchase shares from the public in Exor (35%) and Perrier (24%)

Competition law concerns

A successful Nestle/BSN bid for Perrier would result in the companies holding 82% control of the mineral water market in France – raises concerns of abuse of dominance, as prohibited by Article 86 of TFEU

The strength of Nestlé's efforts lies in the outcome of the Exor and Saint Louis lawsuits

If both lawsuits are won by Nestle, Exor's voting rights in Perrier will be suspended and Nestle will have a chance to win a bid for Perrier and Saint Louis' shares in Perrier will be cancelled, giving Nestle the chance to bid for them as well

If Nestle loses the lawsuits, the Agnelli Family's control of Perrier will make it difficult for Nestle to win a bid for Perrier – Nestle allies may turn if the Agnelli threat is removed

Insiders and Outsiders

Insiders Outsiders

Agnelli Family (IFINT & IFIL) Mentzepoulous Family Exor

In the French corporate network, to be considered an insider a connection to French corporate elite network is essential Corporate elite in France is composed of top executives and directors that are in control of largest corporations, who come from same type of

elite schools, political backgrounds and French origin. Insiders have cross-holdings and close relationships between each other Credit Agricole, Societe Generale, Suez Group, BSN and Lazard form the insiders group because either they have French origin or their CEOs

belong to elite corporate network Nestle belongs to somewhere in the middle between insiders and outsiders because of its Swiss background. However, it is still close to insiders

because of its strong alliances with Lazard Freres and BSN, and its French-speaking origin Agnelli Family, Mentzepoulous Family and Exor form the outsiders because due to their different cultural affiliations, they don’t belong to inner

circle of French corporate elite. Jaques Vincent, chairman of Exor S.A., has a reputation of not getting along well with business leaders in France

BSN

Valuation Model Structure

Nestlé contribution on sales (+2.5%)

Synergies Revenues=Sales+Other

Sales

Revenues

Average sales of ‘91 and ‘92

Base Sales

Base sales growth rate for next ten years

Base Growth

CapEx/Sales rate of 2%

CapEx

Expenses=New Depr.+Old Depr.+Non-depreciation

expenses

Expenses

New Working Capital/Sales of 12%

ΔNWC

12.5% of CapEx for the following 8-years

New Depr.

FF718mm depreciation for old assets

Old Depr.

42% based on trailing years’ average

Tax Rate

EBIAT=EBITx(1-Tax Rate)

EBIAT EBIT=Revenues-

Expenses

EBIT

Non-depreciation expense/Revenue: 85%

Non-Depr. Exp

FCFF=EBIAT-CapEx+Depreciaton-

ΔNWC

FCFF

Expenses=New Depr.+Old Depr.+Non-depreciation

expenses

Expenses

Revenues=Sales+Other Sales

Revenues

CapEx/Sales rate of 2%

CapEx

New Working Capital/Sales of 12%

ΔNWC

Output

Input

Part

1

Part

2

Valuation

Perrier Financials Perrier has a deteriorated sales performance following

mishandling of Benzene scandal Nestlé acquisition is assumed to create cost and revenue

synergies Working capital requirement will decrease being a

subsidiary in a big conglomerate (87% to 85% of sales) Operations will be improved with the addition of

Nestlé’s expertise (14% to 12% of sales) Synergies with Nestlé’s distribution network along with

its expertise in marketing and advertising will add up 2.5% to the 5% presumed sales growth

Further Expansion Prospects USA and UK are “brownfield” markets for mineral waters and they offer dramatic growth opportunities for established brands. Sales growth accompanies synergies with Nestle and improving conditions but it ignores the market expansion towards these densely populated and high income countries. Success in seizing this opportunity would result with even higher growth rate

10%

11%

12%

13%

14%

15%

16%

83%

84%

85%

86%

87%

88%

1989 1990 1991 1992

Non-depreciation expenses/Sales Net Working Capital/Sales

-20%

-15%

-10%

-5%

0%

5%

10%

1990 1991 1992 (E)

Revenue Growth

Growth Actual Growth Estimate

Valuation

Overview • The valuation is based on Nestlé’s perspective

• WACC for Perrier is calculated using Nestlé’s cost of debt • Cost and revenue synergies with Nestlé are integrated into cash flows

• 10-year (1992-2001) period was used for cash flow forecasting • Valuation base is the average of 1990 and 1991 to account better for misleading figures. The

value is calculated as of December 1991 • Complete list of assumptions can be found in the Appendices • Restructuring Charge and Long-term Debt is subtracted from the total value to obtain equity

value after one-time charges and long-term other claims • Trade sale of Volvic immediately after the Perrier acquisition is accounted as the final

adjustment to per-share stock price

Volvic Sales to BSN Volvic sale with a pre-determined price of FF3.05bn is providing additional profit for Nestle. The value of Volvic is obtained through its share of total sales (13%). Nevertheless. it should be noted that Volvic has the highest growth rate in sales (20%). Gains from this trade sale is slightly over-estimated

DCF Valuationa

Total Value 17,819,145

less Long-Term Debt 5,995,319

less Restructuring Charge 600,000

Implied Value of Equity 11,223,826

Implied Price per Share 1,249

Adjustments for Volvic Salea

Volvic Share of Salesb 13%

Volvic Trade Sale Price 3,050,000

Implied Volvic Price 1,492,694

Gain from Volvic Sales 1,557,306

Gain from Volvic Sales per share 173.36

Implied Price per Share (adj) 1,423

9,050

8,769

Valuation Breakdown (FF mm)

Terminal ValueForecasted Period

a All values are in FF thousands except for price per share values (FF) b The details of the calculation is given in the appendix

Valuation

Financial vs Strategic • Nestlé has the upper hand in a potential bidding war. It is seeking strategic

acquisition while Exor (the Agnellis) only bid up to the stand alone and as-it-is value. In the scenarios presented (left). Nestle offers improvements in cost and revenue synergies

• The improvements on costs and revenues have a profound effect on the valueb,c.

Per share prices decreases 21%, 12% and 30% on average when revenue. cost and both synergies are not realized

Food Industry Standards P/E ratios across the food industry reveals that Perrier is highly overvalued in stock market. This is partly due the “acquisition” battle and potential bid wars. Mostly. it can be attributed to the highly-regarded view about Perrier’s growth opportunities and its misleading sales figure after Benzene event

Scenarios As-it-isa Margins+ b Sales+ c Base

WAC

C

10% 1,695 2,080 1,915 2,390

11% 1,369 1,693 1,542 1,940

12% 1,135 1,417 1,276 1,619

13% 960 1,209 1,077 1,378

14% 823 1,047 922 1,191

EXOR NESTLÉ

1) Highlighted (green) values are higher than the current bid (FF1475) 2) Red values are the closest range for the current valuation.

Verdict • Nestlé has a very narrow room to increase current bid (FF1,475); even though Nestlé can create synergies with Perrier. • Price seems slightly high under our assumptions; but not significantly higher. Sale of Volvic (potentially tax-free) and unrealized market potential can

justify current bid with slight room for improvement (~FF200) • Exor/the Agnellis faction is overbidding. Assuming no side benefits exist. this party is close to withdrawal from the potential bid-war

a No synergies are realized margins and growth rates stay the same for the expenses and revenues. b Only cost synergies are realized (i.e. non-depreciation expenses at 85% (from 87%) and Net working capital at 12% (from 14%) c Only revenue synergies are realized (i.e. 2.5% additional revenue synergy is added) d BSN. Cadbury Schweppes. Campbell Soup . General Mills. Heinz. Hershey Foods. Kellogg. Nestle. P&G and Quaker Oats

Food Industry Majorsd P/E

Average 17.9 Median 18.0 Min 14.6 Max 20.8

Perrier 33.7

Underlying Assumptions

Exor’s voting control were consistently referred to as 35.5%. It owns directly 28.8 % in Perrier but through OMNICO it controls another 6.7% stake. Reasonable to assume that 1 share = 1 vote

Saint Louis ownership is through treasury stock which traditionally does not come with voting rights. Yet in this case the treasury stock was sold to a company and was not repurchased back from Perrier. Thus we assume that St. Louis has 13.8 votes

We assume the Leven family to be neutral. Such reasoning is based on the information provided in the case “the role of the Leven family, even though fractioned among them, is not clear. Most likely they will sell to the highest bidder”

We assumed the Public, owning 24% of Perrier to be neutral and interested in tendering their shares to the best price offered

Court procedures were started against Exor’s and St. Louis’s voting rights. We assume that the OMNIC voting rights will be affected by the court decision as well if it decides to have a verdict in favor of Nestle

Different Scenarios

If Nestle wins both cases and Agnelli’s lose If the voting rights of Exor are frozen then the voting rights will decrease from 35.5% to 23.7% That will decrease the Agnelli’s influence from 49.3% to 37.5%

If the court blocks the St. Louis sale the Agnelli’s control would be reduced to 35.5% If both decisions go Nestlé's way then the Agnelli’s will be only left with a mere 23.7% controlling stake

Nestle controls 8.5 votes through Credit Agricole. The firm has made it clear that “it will not shy away from hostile bids to acquire what It

believed were strategically important target companies”. Financially it is much healthier then the Agnelli’s therefore is better positioned to buy the shares of the Leven family and the Public

If Treasury stock have no voting power • 100% – 13.8% = 86.2% 100 / 86.2 = 1.16 per share

The Agnelli’s would have then 35.5*1.16 = 41.18 votes

The Agnelli’s could possibly make it through to acquire a majority stake yet the financials bend on Nestlé's side

Possible Court Decision

Prediction According to Exhibit 9 (2) the failure from Exor to disclose its 35.5% stake in Perrier to the French stock exchange authorities does seem to

constitute a breach of regulation Therefore we expect that the French court will strictly look at this issue and rule against Exor

The treasury sale is less obvious

There are no clear facts regarding the criminal charges However Exhibit 9 (7) states that “capital increases cannot be reserved for certain shareholders and third parties”. If this was the case

and Perrier did issue treasury stock on purpose to Exor then the issuing can be nullified However the St. Louis sales was done around the days when Nestle put forth its offer. If that is proven to be true then the authorities

could have enough “evidence” to nullify the sale

EU Antitrust Case (1)

Article 86

Ex Article 86 of the EEC Treaty states that:

Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market insofar as it may affect trade between Member States.

Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a

competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations

which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

The formation of a dominant position per se is not prohibited under European legislation and it will not be enough to block

the merger between Nestle and Perrier on this grounds

European Legislation

The European Commission has to define the product and geographical market

Product market: Nestle/Perrier would be present only in the sparkling/still mineral water market. The correlation with the prices of other soft drinks are very low, even negative

Geographical market: France is the relevant market because a) transportation costs are very high b) there is very

little trade between member states c) high entrance barriers in French market

The European authorities use the SSNIP Test to use whether there is a serious risk of potential abuse in prices from firms which enjoy a dominant position in the relevant market.

The SSNIP Test measures whether the monopolist in the mineral water production, Nestle/Perrier, would find it profitable for their own margins to increase the price with 5-10%?

Once the market are determined the EC will consider whether the merge leads to a dominant position which could lead ultimately to an abuse of such dominance

EU Antitrust Case (2)

European Legislation

The EC will most probably find that the answer to the SSNIP test to be Yes. That would help to define the relevant market

The approval of the merger without any amendments will result in a very concentrated market, 82% of the mineral water market in France controlled by Nestle/Perrier and BSN, with two established brands who can exploit consumers by imposing higher prices

Nestle/Perrier have agreed upfront for the sale of the Volvic brand to BSN. That will not resolve the competition issues because the parties can easily collude among each other and there are solid grounds to believe that they have close ties among them

In the case the authorities decide to investigate the Perrier/Nestle and BSN as a duopoly the criteria will be more stringent and can possibly result in the sale of other brands

We propose the selling of Contrex, Vichy St. Yorre, Thornon, Pierval whom combined have around 20% market share in France to an independent third party

European Legislation

Note

Article 86 clearly states the need of “affect between Member States”

If we only accept that the French market is the only relevant market then the European authorities should leave the matter in the hands of the French competition authorities and not make it a European anti-competition case

It is essential to explain why the French market constitutes a substantial part of the European market so as to have legal ground to enact Article 86

A comparison of the Anglo-American and French markets for corporate control

France Anglo-AmericanLegal system Civil law (codified) Common law (case based, judge discretion)Disclosure requirements

Mandatory disclosure upon reaching thresholds of 5%, 10%, 20%, 33.33%, 50%, and 66.66%within 15 days to target and 5 days to the CSE

In the US under Section 13(d) of the SEC disclosure is required once the 5% threshold is reached. Under the Hart-Scott-Rodino Improvement Act unless in an excemption, a compnay cannot buy more than US$60 million common shares without reporting to the antitrust authorities

Bidder shareholder approval

Generally not required Generally not required, unless there is an increase of 20% in the number of shares outstanding

Labour union approval

Bidder has to consult with labour union before launching an offer

Not required

Mandatory offers

Mandatory -tender offer for 66.66% of the shares once threshhold of 33.33% or 50% are passed

No mandatory-tender offer in the US. In the Uk according to the City Code this is required once the 30% threshold is passed

Takeover bids Law of Aug. 2, 1989 serves as the basis. It requires approval from the COB and Stock Exchange Council

The William Act but it creates no major/serious obstacles

What actually happened? Nestle declares victory in March 1992

Both court decisions went Nestle’s way. The Court froze 1/3 of Excor’s stake in Perrier for 2 years Voting power of Excor was reduced to 23.7%

Saint Louis purchase of the treasury stock violated restrictions on increasing capital. Therefore the

sale was annulled.

Nestle made a full bid for Perrier of FF 15.3 billion ($2.7 billion) and as a result BSN retrieved from its offer for Exor

The Agnelli’s made a profit of $200 million from the Perrier sale. They took control of Exor

Nestle agreed to sell Volvic to BSN for FF 3.05 billion

“This could have all been settled in an afternoon a very long time ago” (The New York Times)

Appendix

in FF thousands, except per share data Average '90-'91 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Sales 13,409,607 14,482,376 15,640,966 16,892,243 18,243,622 19,703,112 21,279,361 22,981,710 24,820,247 26,805,866 28,950,336

Other Revenues 660,342 713,169 770,223 831,841 898,388 970,259 1,047,880 1,131,710 1,160,003 1,189,003 1,218,728

Revenues 14,069,949 15,195,545 16,411,189 17,724,084 19,142,010 20,673,371 22,327,241 24,113,420 25,980,250 27,994,869 30,169,064 Depreciation (Old Assets) 717,917 718,000 718,000 718,000 718,000 718,000 718,000 718,000 718,000 718,000 718,000

Depreciation (New Assets) - 36,206 75,308 117,539 163,148 212,406 265,604 323,058 385,109 415,918 449,191

Depreciation Total 717,917 754,206 793,308 835,539 881,148 930,406 983,604 1,041,058 1,103,109 1,133,918 1,167,191

Non-depreciation expenses 12,255,878 12,916,213 13,949,510 15,065,471 16,270,709 17,572,365 18,978,155 20,496,407 22,083,212 23,795,639 25,643,704

Expenses 13,670,419 14,742,819 15,901,010 17,151,857 18,502,771 19,961,759 21,537,466 23,186,321 24,929,557 26,810,895

Operating Income 1,525,126 1,668,370 1,823,074 1,990,154 2,170,600 2,365,482 2,575,955 2,793,928 3,065,313 3,358,168

EBIAT 884,573 967,655 1,057,383 1,154,289 1,258,948 1,371,980 1,494,054 1,620,478 1,777,881 1,947,738

Net Working Capital (non-cash) 1,966,975 1,737,885 1,876,916 2,027,069 2,189,235 2,364,373 2,553,523 2,757,805 2,978,430 3,216,704 3,474,040

ΔNWC (non-cash) 229,089- 139,031 150,153 162,166 175,139 189,150 204,282 220,624 238,274 257,336

Capital Expenditures 289,648 312,819 337,845 364,872 394,062 425,587 459,634 496,405 536,117 579,007

FCFF 1,578,221 1,309,113 1,404,924 1,508,399 1,620,153 1,740,847 1,871,196 2,006,558 2,137,407 2,278,586

Cash Flow Projection Basis

Appendix

NDEa/Revenues 85.00% NWCb/Sales 12.00% CapEx/Sales 2.00% Depreciation Rate Newc 12.50% Sales Base Growth 5.50% Synergies Growthd 2.50% Tax Rate 42.00% Depreciation Old (‘000 FFs)e 718,000 Restructuring Expense (‘000 FFs)f 600,000 Volvic Sale Proceeds (‘000 FFs)g 3,050,000

Market Premiumh 7.00% Risk-free Ratei 8.00% Betaj 1.31 Cost of Equity 17.17% Cost of Debtk 11.00%

Stock Price (Dec'91. FFs) 1,221 Shares Outstanding (‘000) 8,983

Market Capitalization (‘000 FFs) 10,968,243 Value of Debt (‘000 FFs) 7,480,609 Enterprise Value (‘000 FFs) 18,448,852 Tax Rate 42.0% WACC 12.79% Terminal Growth Rate 5.00%

Cash Flow WACC

a Non-depreciation expenses b Net working capital c Capital expenditures depreciate on 8-year straight line basis. d Additional growth rate through improved sales due to Nestlé partnership e Depreciation of old assets are taken constant through the forecasted period f One-time fee to eradicate negative results of Benzene “scandal” g Pre-determined sale of Volvic business to BSN with the pre-determined price h Nestlé’s market premium i The yield on long-term government bonds in France as of Dec’91 j Perrier’s beta calculated through regresion using 3-trailing year stock prices and French stock market composite index k Cost of debt for Nestlé

Appendix

Million Liters ('90) Million Liters ('91) % Growth from 1990

Perrier 3,822 3,887 1.7%

Perrier w/o Volvic 3,183 3,103 -2.5%

Volvic 639 784 22.7%

FFs millions 1990 1991 Perrier 1,891 1,919 Other Mineral Water 6,457 6,883 Soft Drinks 288 230 Roquefort Cheese 1,566 1,599 Sorrento Cheese (USA) 1,848 1,845 Services 851 872 Total 12,874 13,350

Volvic share of mineral water sales (Volume)

Volvic Share of Mineral Water Salesa 16.7% 20.2%

Mineral Water Share of Total Salesb 64.8% 65.9%

Volvic Share of Total Sales 10.8% 13.3%

Sales per Business Segments

Volvic share of total sales (FFs)

a Volume share of the mineral water sold is assumed to have 1-1 correlation with the sales figure shares. b Perrier and other mineral water sales are divided to total sales.

Appendix

Company Price/Book Price/Cash Flow Price/Earnings Div. Yield Mkt. Value ($ mn) BSN 2.6 9.8 19.1 1.9 11,533 Cadbury Schweppes 3.7 10.9 16.8 3.6 5,622 Campbell Soup 5.3 13.3 19.5 2.3 9,307 General Mills 9.5 14.5 20.8 2.3 10,773 Heinz 4.2 n/a 15.2 3.0 9,753 Hershey Foods 2.8 12.3 16.2 2.4 3,619 Kellogg 6.3 15.4 20.6 2.0 13,857 Nestle 2.9 8.8 14.6 2.2 23,184 Protector & Gamble 6.1 13.0 20.0 2.1 34,570 Quaker Oats 4.3 9.3 15.7 3.4 n/a

Perrier 0.9 9.8 33.7 0.02 1,990

Average 4.8 11.9 17.9 2.5 13,580 Median 4.3 12.3 18.0 2.3 10,773 Std Deviation 2.1 2.3 2.4 0.6 9,620 Min 2.6 8.8 14.6 1.9 3,619 Max 9.5 15.4 20.8 3.6 34,570 Morgan Stanley Capital International Perspective.

Food Industry Comparison