GRUPO LALA, S.A.B. DE C.V. LALA TO ACQUIRE VIGOR ALIMENTOS, S.A.

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1 GRUPO LALA, S.A.B. DE C.V. LALA TO ACQUIRE VIGOR ALIMENTOS, S.A.

2 DISCLAIMER This material does not constitute an offering document. This material was prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities. Any offering of securities will be made solely by means of an offering memorandum, which will contain detailed information about the Company and its business and financial results, as well as its financial statements. Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended. This presentation includes forward-looking statements or statements about events or circumstances which have not yet occurred. We have based these forward-looking statements largely on our current beliefs and expectations about future events and financial trends affecting our businesses and our future financial performance. These forward-looking statements are subject to risk, uncertainties and assumptions, including, among other things, general economic, political and business conditions, both in Mexico and in Latin America as a whole. The words believes, may, will, estimates, continues, anticipates, intends, expects, and similar words are intended to identify forward-looking statements. We undertake no obligations to update or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Therefore, our actual results could differ substantially from those anticipated in our forward-looking statements. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. We and our affiliates, agents, directors, employees and advisors accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This material does not give and should not be treated as giving investment advice. You should consult with your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any information in this material. 2

3 SUMMARY OF THE ACQUISITION The Board of Directors of Grupo LALA, S.A.B. de C.V. has agreed to propose to LALA s shareholders the acquisition of up to 100% of the shares of Vigor Alimentos S.A., a Brazilian dairy company, and directly or indirectly, 100% of the shares of Itambé Alimentos, S.A. for an implied value of R$5,725 million Considering estimated 2017 net revenues of R$5,024 million and EBITDA of R$329 million, the multiples of the Transaction are 1.1x sales and 17.4x EBITDA As a first step towards completing the transaction, LALA, FB Participações and JBS S.A. entered into a share purchase agreement pursuant to which LALA will acquire, subject to its terms and conditions, 91.99% of the shares of Vigor In addition, as part of the Transaction, LALA may acquire from Arla Foods International A/S ( Arla ) an additional 8% of Vigor s shares, increasing LALA s participation to 99.99% (1) Finally, the Transaction contemplates LALA s acquisition, directly or indirectly, of up to 100% of the shares of Itambé, subject to the exercise of certain rights by Vigor s partner, Cooperativa Central dos Produtores Rurais de Minas Gerais Ltda. under their existing shareholders agreement (1) 0.011% remaining belongs to a minority shareholders who were not considered in the offer 3

4 SUMMARY OF THE ACQUISITION Additional information of the Transaction The Transaction is subject to certain common conditions, including the approval by Grupo LALA s shareholders meeting, governmental authorizations, shareholder agreements and other inherent contractual conditions Substantial provisions for a successful integration and mitigation of risks have been included in the share purchase agreement Financing for the Transaction will include a bridge loan, followed by a combination of long-term debt and additional equity of approximately US$550 million, of which an estimated $315 million will be committed by LALA s current shareholders 4

5 SHAREHOLDERS STRUCTURE 100.0% FB Participación 72.57% 19.43% 8.0% Others 1 0.0% 50.0% 50.0% (1) Minority shareholders who did not accept to participate in the tender offer launched by Vigor s on June 17th,

6 RATIONALE OF THE ACQUISITION Brazil is the largest dairy market in Latin America with a favorable outlook The acquisition supports our vision of becoming the preferred dairy company in the Americas Vigor has top-of-mind brands with unique positioning in yogurt and cheese, and a strong presence in the fast growing foodservice segment We are paying a reasonable price of entry to the market for a high quality asset Synergies with LALA are realistic upsides, excluded from our valuation: Productivity of local milk producers, R&D, raw material and equipment sourcing, engineering, marketing, go-to-market, administration, and other areas The combined companies have a pool of talented executives with proven track records in the Brazilian dairy market The Transaction supports LALA s growth strategy in healthy and nutritious products 6

7 WHY BRAZIL? Brazil is on path towards structural changes that promise a bright future Latin America s largest economy Ongoing institutional and political reforms discussions shall create positive momentum Strong long-term growth prospects, with economic recovery picking up despite recent headwinds GDP Growth (2) 2.0% 2.1% 2.2% 2.3% 2.3% 0.2% 2017E 2018E 2019E 2020E 2021E 2022E World s Largest Milk Producers (3) Attractive demographics with population forecasted to reach ~216 million by 2020 (1) Bn liters, USA In Ch Br Rus GR FR NZ (1) Source: The Economist Intelligence Unit (2) Source: IMF (3) Source: FAO 7

8 VIGOR + ITAMBÉ: COMPLEMENTARY COMPETITIVE STRENGTHS Driving growth via innovation in branded value added dairy products Leading dairy brand in Southeast region with profitable milk business in multiple formats Consumer brands Food service brands Itambé has demonstrated value added dairy segment potential Itambé brand is trusted for quality and expertise in milk 8

9 STRONG PRODUCT PORTFOLIO Leading brands supported by innovation and high impact advertising Yoghurt Vigor is #1 in greek yogurt Combined yoghurt brands are #2 nationally Itambé s profitable milk business has scale and flexibility Milk Itambé #2 powdered milk Brand Multiple milk formats: powdered, condensed, fresh and UHT Cheese Vigor is #1 spreadable cheese Faixa Azul is #1 grated cheese Danubio is #2 fresh cheese (queso fresco) Yoghurt Growth in value added derivatives and yogurt desserts 9

10 SPREADABLE AND FOOD SERVICE BUSINESS ARE NEW TO LALA S PORTFOLIO Spreadable business Food service business Spreadable margarine, butter and cheeses represent 34% of Vigor sales Dedicated growing food service business 10

11 OPERATIONAL INFRASTRUCTURE Combined companies provides consolidated production and distribution infrastructure in central and southeast Brazil Milk collection centers: 11 Vigor (3) Itambé (8) Farmers: 1,260 Vigor; 4,715 Itambé Industrial facilities: 14 Vigor (9) Itambé (5) Distribution centers: 31 Vigor (19) Itambé (12) Milk extraction centers located in the main milk producing basins Processing facilities close to main consumers markets and to sources of raw materials Wide footprint to support sales across the entire country 11

12 POTENTIAL FOR CONTINUED PARTNERSHIPS Leading European dairy company Established Brazilian dairy cooperative known for quality 12

13 FINANCIAL INFORMATION NET REVENUES R$ mm US$ mm 1 5,220 4,928 5,024 4,395 1,866 1,563 1,414 1, E 13 (1) Exchange Rate USD/BRL 2014: R$2.35, 2015: R$3.34, 2016: R$3.49, 2017: R$3.3

14 FINANCIAL INFORMATION EBITDA R$ mm US$ mm Impacted by milk price increase E 14 (1) Exchange Rate USD/BRL 2014: R$2.35, 2015: R$3.34, 2016: R$3.49, 2017: R$3.3

15 POTENTIAL TO CREATE SIGNIFICANT VALUE FOR OUR SHAREHOLDERS NEXT STEPS Leverage full potential of talented team of executives in Vigor, Itambé and LALA Organic growth driven by: Innovation in profitable value added products such as cheese, yoghurt, and specialty milks Increasing presence in the fast growing foodservice and cash & carry channels Geographic expansion Synergies Upstream and downstream operating synergies Synergies across Grupo LALA Margin expansion More profitable product mix Optimization of asset base 15

16 MESSAGE FROM MANAGEMENT Scot Rank, CEO: We are pleased that Vigor will be the platform for growth of LALA in Brazil. Vigor has the scale, the innovation, and talent needed to build profitable value-added dairy business. 16

17 CONTACT INFORMATION Investor Relations Mariana Rojo & Estefania Vazquez +52 (55) Stock Information Grupo LALA has been traded under the ticker LALA on the Bolsa Mexicana de Valores (BMV) since October 16 th, For more information: Forward-looking statements This document contains certain assumptions, projections and forward-looking statements regarding the Company s financial situation, operative results and information, Grupo LALA s business and that of its subsidiaries as well as with regards to the Company s related plans and objectives. This executive summery does not constitute a public securities offering on behalf of LALA and is intended to be used for informational purposes only. 17