A 72-hour M&A case competition on whether Whole Foods Market should be taken private by The Blackstone Group, or seek out strategic partners in order to alleviate sliding margins and increased competition in the US organic and natural foods market. Our solution, a strategic merger with Publix Super Markets and a public health-focused growth strategy was well-received by the judges from Guggenheim Partners.

1. 11/21/2015 KICC Application 1
Goizueta Finance Group
2015 M&A Competition
Benjamin Detemmerman, Benjamin Poon, Jia Tang, Kasper Stockel, Michael Bolliger
Synergy is Still King
NAVIS Global

2. Company & Industry
Problem
Analysis
Whole Foods should merge with Publix
Merging with Publix allows shareholders’ gain to be maximized
Overview
Problems &
Solution
Financials
Whole Foods should not go private with
Blackstone
Executive Summary
11/21/2015 2GFG M&A Competition 2015

3. Company and industry overview
11/21/2015 3
Mission
To promote the vitality and well-
being of people by supplying the
highest quality, most wholesome
foods available.
Locations
412 9 10
Growth rate
• Grocery market 3%
• Natural retail market 9%
Company IndustryCompany Industry
Core
competence
• Premium quality brand
• Superior customer
shopping experience
GFG M&A Competition 2015

4. Increasing costs & competitions hamper Whole Foods’s growth
11/21/2015 4
Missing Targets by
Sales Growth -0.6%
Sales/Square
Foot
-5%
ROIC -0.6%
Gross Margin is narrowingCOGS is growing
Same store sales growth decelerated The only driver of growth is expansion
CostsCompetition
20%
COGS 2013-15
0%
2%
4%
6%
8%
10%
2011 2012 2013 2014 2015
Same Store Sales Growth
34.8%
35.0%
35.2%
35.4%
35.6%
35.8%
36.0%
2013 2014 2015
Gross Margin
290
315
340
365
390
415
440
2011 2012 2013 2014 2015
Number of Stores
Results:
Falling short of expectations
GFG M&A Competition 2015
Key Question:
How to maximize shareholder value in the long run?

5. Whole Foods’s possible alternatives
11/21/2015 5
Go private and get
acquired by Blackstone
Merge with Publix
Others?
GFG M&A Competition 2015

6. Whole Foods should not be acquired by The Blackstone Group
11/21/2015 6
….while Whole Foods is not the caseCompanies that go private with PE are usually
Whole Foods currently has If Whole Foods goes private with PE
• Mature firms with no growth prospect
• Struggling with a FCF problem
• In need of capital restructuring
• Suffering from agency problem
• The industry is growing, and Whole Foods
ranks first
• FCF/OCF = 25.94%
• High debt capacity
• Committed executives
• Sound long-term plans
• Low market price
• Restructure of management level
• Short-sighted, strategies made to ensure
a profitable exit strategy in 3-5 years
• Disadvantageous to shareholders’ gains
GFG M&A Competition 2015

7. Whole Foods’s possible alternatives
11/21/2015 7
Go private and get
acquired by Blackstone
Merge with Publix
Others?
GFG M&A Competition 2015

8. Whole Foods should merge with Publix
11/21/2015 8
Whole Foods Market
• The largest natural and organic foods
supermarket in the U.S.
• 433 stores worldwide, including UK, Canada
and across 42 U.S. states
Publix
• One of the 10 largest-volume supermarket
chains in the U.S., rank 1st in Florida
• 1,109 store locations in 6 Southern states
取長補短,相得益彰 (Compensate our weaknesses while gain through combined strengths)
GFG M&A Competition 2015

9. How are the synergies going to benefit Whole Foods
11/21/2015 9
Cost Synergies
Growth Synergies
• Significant reduction of COGS
• Reduction of overhead costs
• Having access to pharmacy industry and boost
product sales
• Increase in online sales
• Cross-selling opportunities
0%
2%
4%
6%
8%
10%
2011 2012 2013 2014 2015
Same Store Sales Growth
34.8%
35.0%
35.2%
35.4%
35.6%
35.8%
36.0%
2013 2014 2015
Gross Margin
GFG M&A Competition 2015
Narrowing Gross Margin
Decelerated Sales Growth
Benefits from SynergiesExisting Problems

10. Synergy benefits under different scenarios
11/21/2015 10
• Overhead savings 4%
• COGS savings of 3.5%
• EBITDA margin on Pharmacy products
8.5%
• Overhead savings 2%
• COGS savings of 2%
• EBITDA margin on Pharmacy products
7.1% but sales 20% below expectations
• Ready to eat products 22% below
expectation
18.63%
39.45%
11.86%
30.05%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Worst Case: $4.69bn Cost
Synergies and Merger Gains
Overhead Costs COGS
Pharma Extension Ready to eat extension
20.50%
39.24%
10.89%
29.37%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Best Case: $7.73bn Cost
Synergies and Merger Gains
Overhead Costs Cogs
Pharma Extension Ready to Eat Extension
• Overhead savings 2.5%
• COGS savings of 2.5%
• EBITDA margin on Pharmacy products
7.9%
15.74%
37.23%
13.07%
33.96%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Base Case: $5.81bn Cost
Synergies and Merger Gains
Overhead Costs Cogs
Pharma Extension Ready to Eat Extension
Best Case Base Case Worst Case
GFG M&A Competition 2015
Growth
Synergies
Cost
Synergies
Growth
Synergies
Cost
Synergies
Growth
Synergies
Cost
Synergies

11. Whole Foods shareholder gains
11/21/2015 11
• Publix pays a 20% premium to acquire all of Whole Foods Shares
• 1 WFM to 1.8 Publix share exchange rate
• WFM Shareholders own 45% of the total shares of the post-merger firm
• Why Shares? So WFM Shareholders maintain an ownership stake
Merger Approach: Exchange of Shares
BEST CASE BASE CASE WORST CASE
Post-merger firm now worth $34.06bn $32.02bn $30.95bn
Total gain to Whole Foods
shareholders
$16.10bn $14.84bn $14.23bn

12. Buyout may be unfavorable – Whole Foods is currently underpriced
• Growth uncertainty and increasing competition drives down current
price
• Whole Foods share is underpriced:
• Current share price: $29.93
• Intrinsic value: $34.45
11/21/2015 12GFG M&A Competition 2015

13. Comparison of Alternatives
• Blackstone pays a premium to take Whole Foods private.
• The worst case merger scenario would generate higher returns
than a 30% premium.
• The best case merger scenario would generate higher returns
than a 50% premium.
11/21/2015 13GFG M&A Competition 2015

14. Merging with Publix is always the best option
11/21/2015 14
• Highly unlikely – LBO Industry Premium Avg. of 24.3%
• Best alternative for Whole Foods shareholders is to merge
GFG M&A Competition 2015
10.00
11.00
12.00
13.00
14.00
15.00
16.00
17.00
WFM Current
Value
Historic Avg.
Premium
30% PE Case Worst Case 50% PE Case Best Case
Comparison of Alternatives

15. Whole Foods’s possible alternatives
11/21/2015 15
Go private and get
acquired by Blackstone
Merge with Publix
Others?
GFG M&A Competition 2015

16. Why Whole Foods is the best fit for Publix?
16
Financial
• Increasing sales in natural and organic food industry
• Unleveraged
• Solid cash positions (FCF/OCF=25.94%)
• The largest natural and organic foods
supermarket in the U.S.
• Strong brand image
• National presence, covering 42 states
• Global presence
Geographical Brand
Cultural
• Great cultural fit
Strategy Compatibility
GFG M&A Competition 2015

17. 11/21/2015 KICC 2014 17
Don’t sell the chicken that lays golden eggs.
別殺生金蛋的雞

18. Index Page
11/21/2015 AIG M&A Case 2015 18
• Cover Page
• Executive Summary
• Company Overview
• Problem Analysis
• Alternatives Tree
• M&A with Blackstone
• Bad Timing - Underpriced
• M&A with Publix
• Synergies
• Scenario Analysis
• Shareholder Gains
• Financial Comparison
• Whole Foods is the best fit for Publix
• Appendix:
• Risk & Mitigation
• Implementation Timeline
• Historical LBO Premiums
• Distribution of Merger Gains
• Alternatives Evaluation
• Position Map
• Synergies with Publix Pharmacy
• Key Assumptions of Synergy Calculation
• Calculation of Total Shareholder Value

19. Appendix: Risks & Mitigation
11/21/2015 AIG M&A Case 2015 19
Risks
1. Risk of adverse selection
2. Cultural risks: both companies have distinct cultures with could
result in incompatibilities, lower productivity, turnover of key talents
3. Strategic risk leading to costly diversion:
Mitigation
1. Risk of adverse selection: Incentivize actions by performance-
contingent payout structures and other incentive structures
2. Cultural risks: walk the talk and articulate the mission and vision
of the new company on a steady basis.
3. Strategic risk leading to costly diversion: Clear process
planning and scenario technique to address unexpected outcomes
Index Page

20. Appendix: Implementation Process
11/21/2015 AIG M&A Case 2015 20
2016 2017 2018
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Overhead Costs
Gradual Implementation
COGS
Cost Savings
Pharmacy
Pre-launch marketing
Post-launch marketing
Ready-to-Eat
WFM Ready-to-Eat in Publix
Evaluation and improvements
1 Year Pilot
covering 10% of
Publix Stores
Planning
Phase of 2
Years Index Page

21. Appendix: Historical LBO Premiums
11/21/2015 AIG M&A Case 2015 21
Index Page

22. Appendix: Distribution of Merger Gains
11/21/2015 AIG M&A Case 2015 22
Index Page
• Merged Company Value: $34.06bn
• WFM Shareholders Value $16.1bn
• Merged Company Value: $32.07bn
• WFM Shareholders Value $14,84bn
• Merged Company Value: $30.95bn
• WFM Shareholders Value $14.23bn
Best Case Base Case Worst Case
68.95%
31.05%
Best Case Distribution of Merger
Gains
Whole Foods Shareholders Publix Shareholders
71.00%
29.00%
Base Case Distribution of Merger
Gains
Whole Foods Shareholders Publix Shareholders
76.90%
23.10%
Worst Case Distribution of Merger
Gains
Whole Foods Shareholders Publix Shareholders

23. Appendix: Alternatives Evaluation
11/21/2015 KICC 2014 23
Customer Base
Expansion
4 0 0 5
Cost of
Implementation
4 3 4 2
Time Needed 3 3 3 1
Ease of
Implementation
3 4 3 1
More DesirableLess Desirable
Merging with Publix Acquired by
Blackstone
International
M&A
Integrate with
suppliers
0 1 2 3 4 5
Index Page

24. Appendix: Position Map
11/21/2015 AIG M&A Case 24
FreshFoodNon-perishable
Premium Value
Index Page

25. Appendix: Synergy potential of Pharmacies in Whole Food Stores
11/21/2015 KICC 2014 25
• Publix Pharmacies open new growth driver for
the merged company
• In-store pharmacies to provide health consulting
to advice customers on diets, nutrition, and
weight loss by eating more organic and natural
foods in order to prevent diabetes and high
cholesterol.
• Future Vision: expand health services to Whole
Foods Markets
Index Page

26. Appendix: Key Assumptions of Synergy calculation
11/21/2015 KICC 2014 26
• Three Cases considered
• Best Case: 4.4Bn
• Base Case: 3.1Bn
• Low Case: 2.7Bn
• 38.5% Tax Rate
• WACC 9.2%
• EBITDA margins of 8.5%
• Ramp up of synergies of 5 years
Key Assumptions of Synergy calculation
Index Page

27. 11/21/2015 KICC 2014 27
Index Page
Appendix: Calculating the Total Shareholder Value
Publix P $20,00 WFM P $29,93
Publix # 777090000 WFM # 357860000
Publix V $15.541.800.000 WFM V $10.710.749.800
Premium 20%
Price Paid $12.852.899.760
Shares Issued by Publix to pay for WFM 642644988
Total Shares post-merger 1419734988
Share Exchange Rate 1,80 Publix Shares for each WFM share
Apparent Cost $2.142.149.960
PVCS $5.818.000.000
Apparent NPV Publix $3.675.850.040
Value of New Company $32.070.549.800
New Stock Price $22,59
True Cost $3.806.028.518
True NPV Publix $2.011.971.482
WFM Shareholders get 3806028518 65,42% of the merger gains
Publix Shareholders get 2011971482 34,58% of the merger gains
WFM Shareholders now have 45,27% of the total shares in the new company
Publix Shareholders now have 54,73% of the total shares in the new company
WFM total shareholder value $14.841.722.170
Publix total shareholder value $17.228.827.630
$32.070.549.800
71.00%
29.00%
Base Case Distribution of Merger Gains
Whole Foods Shareholders Publix Shareholders