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To: Carlos Johnson

From: Davin Nathan


Subject: Recommendation for potential M&A targets for WorldWide Brewing Co.

Good Evening Carlos, allow me to introduce myself. My name is Davin Nathan from Anna’s team. I would like to
present below the description of each companies that are potential for M&A transactions, with their
descriptions and relevance to WorldWide Brewing, also the recommendation of each companies. The
conclusion of the analysis is that HappyHour Co. and Spirit Bay are the companies that are recommended and
interesting for WorldWide Brewing.

Company Description Relevance to WorldWide Recommendation


Brewing

HappyHour HappyHour Co. is the largest It has similar operations to Recommend


Co. player in Singapore and WorldWide Brewing across the
Malaysia, in the segments of same segments and is the
beer, spirits and non- leading player in Singapore and
alcoholic beverages. Its Malaysia, suggesting the
operations include potential for strategic benefits
manufacturing facilities, and synergies. It has solid
distribution and direct sales financial results and an
and it has demonstrated ownership structure that is
strong growth in EBITDA in owned by 3 families, rendering a
FY2020 which was up 20% potential acquisition relatively
pcp and amounted to simple and feasible. HappyHour
US$300mm. Co. would be appropriate to
share.
Spirit Bay Spirit Bay is the largest It has similar operations to Recommend
prominent player in WorldWide Brewing across the
Indonesia, second in same segments, but Spirit Bay
Singapore and Malaysia. Its leads only in 1 market which is
operations include Indonesia whilst being second in
manufacturing facilities, Singapore and Malaysia, it
distribution and direct sales displays a solid strategic benefit
and it has displayed strong which is being a prominent
growth in EBITDA in FY2020 player three markets (Indonesia,
which was up 40% pcp and Malaysia, and Singapore). The
amounted to US$400mm but financial results is very strong
noted that they have been but need to be considered that
doing aggressive cost cutting one driver that drives the
measures to improve the earnings is cost cutting, the
earnings. potential of this would be a
merger and it will be feasible
looking at the ownership
structure owned 40% by
employee and 60% by Global
Sponsor. Spirit Bay can be
another one to be considered
because they have plenty room
to growth and shows good
management by improving the
cost effectiveness by cost cutting
measures.
Hipsters’ Hipsters’ Ale is a Malaysian It has the similar operations with Not Recommend
Ale beer and spirits company WorldWide Brewing across the
operating in Singapore, same segments, the one that
Indonesia, Japan, Korea, and makes this different is they have
Cambodia whereas the consortium of independent
operations include microbreweries in each
manufacturing facilities, respective region, as the
distribution, and direct sales. shareholders is the independent
Hipsters’ Ale is not the largest breweries itself from respective
player in Asia but the region which is 30 breweries and
manufacturing facilities is led assume that the cost to build a
by a consortium of new microbreweries is $1
independent microbreweries million (data based on Leonard
in each respective region that Kolada, founder of Smokehouse
makes Hipsters’ Ale an edge, Brewing Co. Ohio), we actually
also it displays solid growth in got 30$ million from
EBITDA FY 2020 which grows microbreweries alone. From
15% pcp and amounted to financial perspective it shows
US$200mm EBITDA. solid growth, but looking at the
ownerships structure it would
not be feasible to do the
acquisition and even though
they have independent
microbreweries in each region,
they are not the prominent
player I do not see anything
really tempting for us to do the
M&A transaction with Hipsters’
Ale.
Brew Co. Brew Co. is a Malaysian beer It has one of two operation from not recommend
and spirits company that only WorldWide Brewing Co. which is
operate manufacturing in manufacturing. As WorldWide
facilities, but they are the Brewing Co. want to seek
largest alcohol manufacturing growth and expansion, I don’t
player in Malaysia. It displays see Brew Co. fit the criteria
poor financial performance because I can assume that Brew
with the earnings down 5% Co. is a mature business with big
pcp with EBITDA of EBITDA ($US200mm different
$US800mm in FY2020. with WorldWide Brewing Co.)
and it doesn’t show splendid
growth, in fact the earnings
down for FY2020 and they only
hold 1 market which is Malaysia
for the earning driver. Feassible
for M&A but not recommended.
Bevy’s Bevy’s Direct is Singapore- It has similar operation with Not recommend
Direct based beer, spirits, and non- WorldWide Brewing Co. which is
alcoholic beverages across wholesale distribution, from
Malaysia, China, Indonesia, financial perspective it serves
Japan, Korea, Cambodia, good growth but they are not
Australia and New Zealand prominent and large player in
but its operation is solely on the locations listed. The
wholesale distribution. It transaction is feasible by looking
displays strong financial at ownership structure but I
performance with growth of don’t see anything exciting in
20% pcp amounted EBITDA Bevy’s Direct.
US$250mm FY2020.

Davin Nathan

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