AIBC 2019 HSBC M&A Competition
Our team in the Investment Banking Division has been selected to present a pitch book - to be termed as a ‘Strategic Review’ - to the Board of Directors of our client, The Coca-Cola Company (KO), regarding a potential acquisition target in the food and beverage industry in line with their growth strategy.
Note: Any mention of The Coca-Cola Company in the pitchbook has been redacted to avoid any conflicts of interests with HSBC (competition judges).
Asia Investment & Banking Conference 2018 – HSBC M&A Competition Champions (A...Amir Hisham
AIBC 2018 HSBC M&A Competition
Our team in the Investment Banking Division has been selected to present a pitch book - to be termed as a ‘Strategic Review’ - to the Board of Directors of our client, Michael Kors Holdings Limited (KORS), regarding a potential acquisition target in the fashion industry in line with their growth strategy.
An analysis of the Hilton hotels buyout by BlackstoneFrancesco Romeo
This presentation is about the Hilton hotels buyout. We analyze the case with different methods and our conclusion is that it was good deal for both Hilton and Blackstone.
Credit Suisse Fall 2015 Pitch Competitionjontripp17
The document discusses Credit Suisse seeking an anchor investment for its private equity fund. It recommends purchasing ABM Industries as a platform company to build upon through acquisitions. The recommendation analyzes ABM's industry exposure, growth strategy, margin expansion opportunities, management team, and potential exit opportunities for investors.
Conducted numerous valuation methodologies and thorough research for Steinkeller Solutions, a highly specialized staffing firm focused on Life Sciences, Technologies, Healthcare IT, and Energy. Assessed Bloomberg data, company financials, and company strategy to make an informed strategic sale recommendation to a sponsor to William Blair bankers.
UBS Investment Banking Challenge - Campus Final Pitch Book 2018 Oscar Haman
Case study competition on the past M&A transaction between Tatts Group Ltd and Tabcorp
Completing this case involved:
- Advising Tatts on how to proceed against the Tabcorp offer
- Creating a competitive bidding environment to force Tabcorp to raise their offers
- Market analysis of the gambling sector
- Valuation of Tatts through a DCF
- Constructing a merger model between Tatts and Tabcorp
- Devising various defence strategies against unfavourable takeover proposals
- Write-up of an ASX notice to Tatts' shareholders
- Creation of a decision tree to guide Tatts throughout this defence
This document analyzes Yell, a UK-based directory services company with both UK and US businesses, as a potential leveraged buyout opportunity. It provides financial projections and assumptions for the UK and US businesses, including adjusted growth rates and margins. It also details the company's debt structure, cash flows, and currency exchange rates that would need to be considered in an LBO. Key questions addressed are whether Yell is a good LBO candidate and why BT wants to sell the business.
2017 William Blair & Company Investment Banking Case Competition - FinalistIan Socrates
- Patterson Education Group is a scalable education platform delivering exceptional student outcomes through individually tailored curriculums and a talented executive team.
- Valuation analysis values PEG's enterprise value between $157-$177 million based on comparable, precedent, and discounted cash flow analyses.
- The recommendation is to pursue a sale to a strategic buyer given industry consolidation trends and PEG's compelling growth profile and market position.
Costco acquires Target in an all-stock deal valued at $56 billion. Under the terms of the agreement, Target shareholders will receive 0.62 Costco shares for each Target share. The deal is structured as a tax-free reverse triangular merger. The acquisition is expected to generate $1 billion in annual synergies by increasing Target's return on equity from 9.4% to 14%. Target will operate as a subsidiary of Costco and retain its name and management team. The deal requires approval from both companies' shareholders.
Asia Investment & Banking Conference 2018 – HSBC M&A Competition Champions (A...Amir Hisham
AIBC 2018 HSBC M&A Competition
Our team in the Investment Banking Division has been selected to present a pitch book - to be termed as a ‘Strategic Review’ - to the Board of Directors of our client, Michael Kors Holdings Limited (KORS), regarding a potential acquisition target in the fashion industry in line with their growth strategy.
An analysis of the Hilton hotels buyout by BlackstoneFrancesco Romeo
This presentation is about the Hilton hotels buyout. We analyze the case with different methods and our conclusion is that it was good deal for both Hilton and Blackstone.
Credit Suisse Fall 2015 Pitch Competitionjontripp17
The document discusses Credit Suisse seeking an anchor investment for its private equity fund. It recommends purchasing ABM Industries as a platform company to build upon through acquisitions. The recommendation analyzes ABM's industry exposure, growth strategy, margin expansion opportunities, management team, and potential exit opportunities for investors.
Conducted numerous valuation methodologies and thorough research for Steinkeller Solutions, a highly specialized staffing firm focused on Life Sciences, Technologies, Healthcare IT, and Energy. Assessed Bloomberg data, company financials, and company strategy to make an informed strategic sale recommendation to a sponsor to William Blair bankers.
UBS Investment Banking Challenge - Campus Final Pitch Book 2018 Oscar Haman
Case study competition on the past M&A transaction between Tatts Group Ltd and Tabcorp
Completing this case involved:
- Advising Tatts on how to proceed against the Tabcorp offer
- Creating a competitive bidding environment to force Tabcorp to raise their offers
- Market analysis of the gambling sector
- Valuation of Tatts through a DCF
- Constructing a merger model between Tatts and Tabcorp
- Devising various defence strategies against unfavourable takeover proposals
- Write-up of an ASX notice to Tatts' shareholders
- Creation of a decision tree to guide Tatts throughout this defence
This document analyzes Yell, a UK-based directory services company with both UK and US businesses, as a potential leveraged buyout opportunity. It provides financial projections and assumptions for the UK and US businesses, including adjusted growth rates and margins. It also details the company's debt structure, cash flows, and currency exchange rates that would need to be considered in an LBO. Key questions addressed are whether Yell is a good LBO candidate and why BT wants to sell the business.
2017 William Blair & Company Investment Banking Case Competition - FinalistIan Socrates
- Patterson Education Group is a scalable education platform delivering exceptional student outcomes through individually tailored curriculums and a talented executive team.
- Valuation analysis values PEG's enterprise value between $157-$177 million based on comparable, precedent, and discounted cash flow analyses.
- The recommendation is to pursue a sale to a strategic buyer given industry consolidation trends and PEG's compelling growth profile and market position.
Costco acquires Target in an all-stock deal valued at $56 billion. Under the terms of the agreement, Target shareholders will receive 0.62 Costco shares for each Target share. The deal is structured as a tax-free reverse triangular merger. The acquisition is expected to generate $1 billion in annual synergies by increasing Target's return on equity from 9.4% to 14%. Target will operate as a subsidiary of Costco and retain its name and management team. The deal requires approval from both companies' shareholders.
15th Annual William Blair Investment Banking Case CompetitionOscar Arenas
Talawanda Turbines is seeking strategic options including an IPO, sale to a strategic acquirer, or sale to a financial sponsor. The valuation analysis values Talawanda between $590-670 million based on precedent transactions, comparable companies, and a DCF model. Key growth drivers include increasing exposure to resilient end markets like food & beverage and healthcare. The company has strong margins and market share in the fragmented industrial fans/blowers industry. William Blair recommends a near-term sale to a strategic buyer or financial sponsor that can leverage synergies and expand Talawanda's market presence.
The document provides an overview and valuation of Mercury Athletic Footwear, which manufactures and sells athletic and casual footwear. It summarizes Mercury's products, customers, strengths, and weaknesses. It also summarizes projections for Mercury's revenue, expenses, cash flows, and valuation using a discounted cash flow model. The valuation ranges from $500-600 million depending on the assumptions for discount rate and long-term growth rate.
This document provides an analysis of Patterson Education Group (PEG) for a case competition. It includes:
- An executive summary that outlines PEG's unique personalized high school model and strong projected growth rates.
- An industry overview of the growing K-12 education sector and education technology industry.
- An analysis of PEG's business model, growth opportunities, and financial projections. Strengths include barriers to entry and technological advantages.
- A valuation of PEG using precedent transactions, comparable company analyses, and a discounted cash flow model, resulting in an estimated valuation range of $170-300 million.
- A discussion of strategic options such as organic growth through new schools and technology expansion, or
This is a stock pitch for BlackBerry that was presented to faculty and investment professionals for the Cleveland Research Company Stock Pitch Competition in April 2017. My team's pitch was selected as one of the four finalist groups.
CSX has offered to acquire Conrail through a two-tier merger agreement. The front-end offer is for 40% of shares at $92.50 per share, while the back-end offer values each Conrail share at $86.78 through an exchange of CSX stock. This values Conrail at an effective price of $89.06 per share. Analysts value Conrail using multiples and DCF valuations to compare to CSX's offer price. The multiples valuation ranges from $90.48 to $126.98 per share based on comparable railroad transactions. The DCF valuation ranges from $93.24 to $93.54 per share when incorporating the estimated synergies of $370 million
Miami University 2015 William Blair I-Banking Competition WinnerMichael T. Loffredo
Armstrong Foods is a leading food and beverage distributor seeking a potential sale. Valuation analyses value the company between $450-480 million based on comparable company and precedent transaction multiples of 8-10x EBITDA. A sale to a financial sponsor is recommended due to potential synergies, though a strategic buyer could work if they retain management. Key considerations include the fragmented distribution industry and Armstrong's diversified customer and product base.
2020 - 13th Annual William Blair Investment Banking Case Competition Presenta...Demetre Carnot
Paesano's Products is a leading contract manufacturer and formulator for personal care and household products. The document discusses Paesano's industry, financials, growth opportunities, and strategic options moving forward. It recommends a full sale of Paesano's to a financial sponsor or strategic acquirer, valued between $700-760 million, to take advantage of high acquisition interest while retaining strong management.
George Fisher is the new CEO of Eastman Kodak Company, which has lost market share in photo film to competitors like Fuji in recent years. Kodak's market share has dropped from 76% to 70% in the last 5 years. Fisher has devised a new strategy called "Funtime" to reposition Kodak's film brands. The strategy involves offering three tiers of films - Gold Plus as the flagship premium brand, Royal Gold as the new super premium brand, and Funtime as an economy brand to be sold only twice a year in value packs to compete on price.
Horniman Horticulture, FIL 349 ( Advanced Financial Theory and Problems)CameronMcintosh8
Overview: This is a presentation on Horniman Horticulture, we have devised a Naïve and Revised forecast to extrapolate out the income statement and balance sheet from 2016 to 2018. Our presentation outlines the difference between Profits and Cash. Horniman Horticulture had high profitability but their cash balance was decreasing year-over-year. Our Revised Forecast applies our assumptions to create manageable growth without addition financing through debt or equity.
Problem: Horniman Horticulture started with a cash balance $120,000 at the end of 2012, then decreased to $9,400 at the end 2015. Cash was eroding year-over-year with no signs of stopping as the naive forecast shows they will have a negative cash balance in 2016 through 2018.
Solution/Assumption: We discovered that Horniman Horticulture was growing to fast for the business to fund its operations without debt or equity. Their cash cycle was above industry average with high receivable days, low payable days, and high inventory days. We kept payable days constant as the firm gets a 2% discount from suppliers when paid under 10 days. We increased receivable days and inventory days as they go to a more mature plant which increase gross margin. The change in cash cycle decreases revenue growth from 30% to and controllable growth of 8.3%.
King Capital recommends that Ralph Lauren pursue a negotiated sale to VF Corp. An acquisition by VF Corp would result in Ralph Lauren gaining a stronger manufacturing base through integration with VF Corp's existing network of manufacturers. This would allow Ralph Lauren to reduce operational expenses. The acquisition would also stabilize Ralph Lauren's stock valuation, which has recently been volatile, and maximize shareholder value through securing long-term growth opportunities.
Active Gear, Inc is considering acquiring Mercury Athletic to double its revenue and expand its market presence. John Liedtke analyzed Mercury's financials from 2006-2011 to determine if the acquisition would be financially beneficial. The net present value of Mercury's projected free cash flows is $275,399.78 using a 7.65% discount rate, indicating the acquisition would provide a positive return on investment. Liedtke also considered qualitative benefits like increased market share and preventing competitors from acquiring Mercury. Based on the financial analysis, the acquisition appears justified and would create value for Active Gear.
The acquisition of Genentech by Roche would provide several strategic benefits. It would increase Roche's market power in the biotechnology industry by acquiring Genentech's large market share and barrier to market entry. The acquisition also reduces Roche's financial and operational risks by diversifying its product portfolio. Synergies from cost cutting and new opportunities could generate an estimated net present value of $3.09 billion for Roche. Based on discounted cash flow, comparable company, and precedent transaction analyses, the estimated enterprise value for Genentech is $107 billion, implying an acquisition offer price of $98 per share.
This document provides an overview and analysis of Skipper's Sporting Goods for potential transaction options. It summarizes the company's position in the sporting goods industry, growth opportunities, and financial projections. Valuation methods, including leveraged buyout, IPO, and precedent transactions, imply an enterprise value range of $1,400-$1,600 million. The recommendation will evaluate strategic acquisition, sponsor buyout, IPO, and maintaining the status quo based on maximizing shareholder value and management goals.
- Patterson Education Group is a scalable education platform delivering exceptional student outcomes through individually tailored curriculums and a talented executive team.
- Valuation analysis values PEG's enterprise value between $157-$177 million based on comparable, precedent, and discounted cash flow analyses.
- The recommendation is to pursue a sale to a strategic buyer given industry consolidation trends and PEG's compelling growth profile and market position.
1) Active Gear Inc. is considering acquiring Mercury Athletic, a footwear company being sold by its parent company, to double its revenue and expand its market presence.
2) An analysis of Mercury's financial data from 2006-2011 shows that it has higher revenue growth than AGI and its acquisition could help compensate for weaknesses in AGI's product mix.
3) Calculating Mercury's discounted cash flows from 2006-2011 using a 7.65% discount rate results in a positive NPV of $275,399.78 for the acquisition, indicating it should be undertaken.
The document provides an agenda and summaries from a meeting of DIGBYCO. It discusses the sensor industry overview, DIGBY's strategy and goals, a competitive analysis of their competitors, areas where DIGBY could improve, and what they did right. Key points include maintaining a presence in every market, distinguishing products with design and awareness, increasing market share against top competitors Erie and Chester, utilizing high capacity and financial leverage, and recommendations to improve research and development, marketing, production, and finance.
The document provides an equity analysis and strategic options for J.M. Smucker Co. It finds that SJM is trading relatively close to its calculated value based on comparable company and discounted cash flow analyses. Three strategic options are presented: 1) Sell the underperforming International and Away From Home segment to focus resources and raise margins, 2) Merge with Conagra Brands to expand into refrigerated/frozen foods, and 3) Acquire a "better-for-you" brand to diversify the portfolio for changing consumer preferences.
Coca-Cola Amatil Ltd. is rated BBB+/Stable/A-2 by Standard & Poor's. The rating reflects CCA's satisfactory business risk from leading market positions in Australia and New Zealand, and intermediate financial risk with debt-to-EBITDA expected to be in the 2x-3x range. The outlook is stable based on expectations that CCA will maintain its market position and profitability in Australia while expanding in more volatile Asian markets, and keep debt-to-EBITDA between 2x-3x. Key risks include further revenue pressures in Australia and economic challenges in Indonesia and PNG.
15th Annual William Blair Investment Banking Case CompetitionOscar Arenas
Talawanda Turbines is seeking strategic options including an IPO, sale to a strategic acquirer, or sale to a financial sponsor. The valuation analysis values Talawanda between $590-670 million based on precedent transactions, comparable companies, and a DCF model. Key growth drivers include increasing exposure to resilient end markets like food & beverage and healthcare. The company has strong margins and market share in the fragmented industrial fans/blowers industry. William Blair recommends a near-term sale to a strategic buyer or financial sponsor that can leverage synergies and expand Talawanda's market presence.
The document provides an overview and valuation of Mercury Athletic Footwear, which manufactures and sells athletic and casual footwear. It summarizes Mercury's products, customers, strengths, and weaknesses. It also summarizes projections for Mercury's revenue, expenses, cash flows, and valuation using a discounted cash flow model. The valuation ranges from $500-600 million depending on the assumptions for discount rate and long-term growth rate.
This document provides an analysis of Patterson Education Group (PEG) for a case competition. It includes:
- An executive summary that outlines PEG's unique personalized high school model and strong projected growth rates.
- An industry overview of the growing K-12 education sector and education technology industry.
- An analysis of PEG's business model, growth opportunities, and financial projections. Strengths include barriers to entry and technological advantages.
- A valuation of PEG using precedent transactions, comparable company analyses, and a discounted cash flow model, resulting in an estimated valuation range of $170-300 million.
- A discussion of strategic options such as organic growth through new schools and technology expansion, or
This is a stock pitch for BlackBerry that was presented to faculty and investment professionals for the Cleveland Research Company Stock Pitch Competition in April 2017. My team's pitch was selected as one of the four finalist groups.
CSX has offered to acquire Conrail through a two-tier merger agreement. The front-end offer is for 40% of shares at $92.50 per share, while the back-end offer values each Conrail share at $86.78 through an exchange of CSX stock. This values Conrail at an effective price of $89.06 per share. Analysts value Conrail using multiples and DCF valuations to compare to CSX's offer price. The multiples valuation ranges from $90.48 to $126.98 per share based on comparable railroad transactions. The DCF valuation ranges from $93.24 to $93.54 per share when incorporating the estimated synergies of $370 million
Miami University 2015 William Blair I-Banking Competition WinnerMichael T. Loffredo
Armstrong Foods is a leading food and beverage distributor seeking a potential sale. Valuation analyses value the company between $450-480 million based on comparable company and precedent transaction multiples of 8-10x EBITDA. A sale to a financial sponsor is recommended due to potential synergies, though a strategic buyer could work if they retain management. Key considerations include the fragmented distribution industry and Armstrong's diversified customer and product base.
2020 - 13th Annual William Blair Investment Banking Case Competition Presenta...Demetre Carnot
Paesano's Products is a leading contract manufacturer and formulator for personal care and household products. The document discusses Paesano's industry, financials, growth opportunities, and strategic options moving forward. It recommends a full sale of Paesano's to a financial sponsor or strategic acquirer, valued between $700-760 million, to take advantage of high acquisition interest while retaining strong management.
George Fisher is the new CEO of Eastman Kodak Company, which has lost market share in photo film to competitors like Fuji in recent years. Kodak's market share has dropped from 76% to 70% in the last 5 years. Fisher has devised a new strategy called "Funtime" to reposition Kodak's film brands. The strategy involves offering three tiers of films - Gold Plus as the flagship premium brand, Royal Gold as the new super premium brand, and Funtime as an economy brand to be sold only twice a year in value packs to compete on price.
Horniman Horticulture, FIL 349 ( Advanced Financial Theory and Problems)CameronMcintosh8
Overview: This is a presentation on Horniman Horticulture, we have devised a Naïve and Revised forecast to extrapolate out the income statement and balance sheet from 2016 to 2018. Our presentation outlines the difference between Profits and Cash. Horniman Horticulture had high profitability but their cash balance was decreasing year-over-year. Our Revised Forecast applies our assumptions to create manageable growth without addition financing through debt or equity.
Problem: Horniman Horticulture started with a cash balance $120,000 at the end of 2012, then decreased to $9,400 at the end 2015. Cash was eroding year-over-year with no signs of stopping as the naive forecast shows they will have a negative cash balance in 2016 through 2018.
Solution/Assumption: We discovered that Horniman Horticulture was growing to fast for the business to fund its operations without debt or equity. Their cash cycle was above industry average with high receivable days, low payable days, and high inventory days. We kept payable days constant as the firm gets a 2% discount from suppliers when paid under 10 days. We increased receivable days and inventory days as they go to a more mature plant which increase gross margin. The change in cash cycle decreases revenue growth from 30% to and controllable growth of 8.3%.
King Capital recommends that Ralph Lauren pursue a negotiated sale to VF Corp. An acquisition by VF Corp would result in Ralph Lauren gaining a stronger manufacturing base through integration with VF Corp's existing network of manufacturers. This would allow Ralph Lauren to reduce operational expenses. The acquisition would also stabilize Ralph Lauren's stock valuation, which has recently been volatile, and maximize shareholder value through securing long-term growth opportunities.
Active Gear, Inc is considering acquiring Mercury Athletic to double its revenue and expand its market presence. John Liedtke analyzed Mercury's financials from 2006-2011 to determine if the acquisition would be financially beneficial. The net present value of Mercury's projected free cash flows is $275,399.78 using a 7.65% discount rate, indicating the acquisition would provide a positive return on investment. Liedtke also considered qualitative benefits like increased market share and preventing competitors from acquiring Mercury. Based on the financial analysis, the acquisition appears justified and would create value for Active Gear.
The acquisition of Genentech by Roche would provide several strategic benefits. It would increase Roche's market power in the biotechnology industry by acquiring Genentech's large market share and barrier to market entry. The acquisition also reduces Roche's financial and operational risks by diversifying its product portfolio. Synergies from cost cutting and new opportunities could generate an estimated net present value of $3.09 billion for Roche. Based on discounted cash flow, comparable company, and precedent transaction analyses, the estimated enterprise value for Genentech is $107 billion, implying an acquisition offer price of $98 per share.
This document provides an overview and analysis of Skipper's Sporting Goods for potential transaction options. It summarizes the company's position in the sporting goods industry, growth opportunities, and financial projections. Valuation methods, including leveraged buyout, IPO, and precedent transactions, imply an enterprise value range of $1,400-$1,600 million. The recommendation will evaluate strategic acquisition, sponsor buyout, IPO, and maintaining the status quo based on maximizing shareholder value and management goals.
- Patterson Education Group is a scalable education platform delivering exceptional student outcomes through individually tailored curriculums and a talented executive team.
- Valuation analysis values PEG's enterprise value between $157-$177 million based on comparable, precedent, and discounted cash flow analyses.
- The recommendation is to pursue a sale to a strategic buyer given industry consolidation trends and PEG's compelling growth profile and market position.
1) Active Gear Inc. is considering acquiring Mercury Athletic, a footwear company being sold by its parent company, to double its revenue and expand its market presence.
2) An analysis of Mercury's financial data from 2006-2011 shows that it has higher revenue growth than AGI and its acquisition could help compensate for weaknesses in AGI's product mix.
3) Calculating Mercury's discounted cash flows from 2006-2011 using a 7.65% discount rate results in a positive NPV of $275,399.78 for the acquisition, indicating it should be undertaken.
The document provides an agenda and summaries from a meeting of DIGBYCO. It discusses the sensor industry overview, DIGBY's strategy and goals, a competitive analysis of their competitors, areas where DIGBY could improve, and what they did right. Key points include maintaining a presence in every market, distinguishing products with design and awareness, increasing market share against top competitors Erie and Chester, utilizing high capacity and financial leverage, and recommendations to improve research and development, marketing, production, and finance.
The document provides an equity analysis and strategic options for J.M. Smucker Co. It finds that SJM is trading relatively close to its calculated value based on comparable company and discounted cash flow analyses. Three strategic options are presented: 1) Sell the underperforming International and Away From Home segment to focus resources and raise margins, 2) Merge with Conagra Brands to expand into refrigerated/frozen foods, and 3) Acquire a "better-for-you" brand to diversify the portfolio for changing consumer preferences.
Coca-Cola Amatil Ltd. is rated BBB+/Stable/A-2 by Standard & Poor's. The rating reflects CCA's satisfactory business risk from leading market positions in Australia and New Zealand, and intermediate financial risk with debt-to-EBITDA expected to be in the 2x-3x range. The outlook is stable based on expectations that CCA will maintain its market position and profitability in Australia while expanding in more volatile Asian markets, and keep debt-to-EBITDA between 2x-3x. Key risks include further revenue pressures in Australia and economic challenges in Indonesia and PNG.
Bloomin' Brands is recommended as a buy with an 11.85% upside potential. It has strong domestic and international growth prospects through its portfolio of restaurant brands like Outback Steakhouse. Domestically, sales and traffic continue to outperform peers. Internationally, the global casual dining market is growing faster than the US market, allowing for expansion opportunities. Improving margins through cost savings initiatives and strong operating cash flow provide additional upside to the stock.
- BevCo, a leading producer of wine and spirits, is facing declining revenue and profitability due to shifting consumer tastes towards beer. Acquiring BeerCo, a craft brewer, could help BevCo diversify into the growing beer market.
- A SWOT analysis found BeerCo's established supply chain and brand in the US are strengths, while its lack of experience in wine and spirits is a weakness. Acquiring BeerCo could help counter threats from large brewers developing premium beers.
- Valuation of BeerCo using DCF analysis values it at $4.2 billion, while comparable transactions suggest a range of $1.9-7.2 billion. Factors like synergies, market
SABMiller is focused on driving future success by leveraging its scale, focusing on beer category growth, and partnering with stakeholders. It will refresh core brands, increase premium offerings, accelerate global brands, and innovate across beer styles. SABMiller will also expand into adjacent categories and non-alcoholic drinks. It aims to optimize its supply chain and procurement through a shared services model. Sustainable development partnerships and dialogue with regulators on alcohol will also contribute to SABMiller's future success. Current headwinds in some developing markets are temporary, while long term fundamentals remain strong.
The document analyzes Starbucks Corporation. It discusses the current economic climate, specialty eateries industry analysis, Starbucks firm overview and management, financial analysis comparing Starbucks to competitors, potential future economic impacts, SWOT analysis, and intrinsic stock value calculation. It concludes that Starbucks stock is slightly underpriced given the company's continued growth strategy and maintaining their customer experience.
- Kellogg Company is a leading global manufacturer of cereal and convenience foods. Its largest customer is Walmart, accounting for 20% of sales.
- The company has a diversified debt portfolio including bonds, commercial paper, and bank loans. It has adequate liquidity to cover upcoming debt obligations.
- Kellogg acquired Pringles in 2012, expanding its international snacks business. Key strategies include growth in emerging markets and executing category growth plans.
This document analyzes Coca-Cola's financial statements and business strategies. It begins with an analysis of Coca-Cola's governance, including details about the CEO, board of directors, and executive compensation. It then discusses Porter's Five Forces analysis of the soda industry, finding rivalry to be high but threats of new entrants and substitutes to be medium. The document also analyzes Coca-Cola's income statements, balance sheets, profitability, and forecasts growth.
Coca-Cola is a soft drink company founded in the late 1890s. It is the largest beverage company in the world and sells products in over 200 countries. While Coca-Cola faces competition from Pepsi, it maintains the number one market share position due to its strong brand value, effective pricing, and marketing. In recent years, Coca-Cola has increased its revenues and net income.
This business valuation report values Starbucks Corporation as of November 29, 2016 using two methods. The discounted cash flow method values Starbucks at $56.15 billion. The relative valuation method values Starbucks between $67.15-$80.86 billion based on comparable company multiples. By weighting the DCF 50% and relative values 25% each, the final fair market value is estimated to be $65.07 billion. The report also examines Starbucks' financials, industry, and capital structure to support the valuation.
Siddharth Das presents an investment thesis on Green Mountain Coffee Roasters (GMCR). GMCR leads the single-cup coffee market with 13% US market share in a growing industry. While concerns over competition have weighed on the stock, Das argues worries over margins are overestimated. GMCR has over 30% short interest, setting up potential for a short squeeze. Overall Das views GMCR as undervalued due to the strength of its brands in coffee and potential for continued growth and innovation.
Natureview Farm is a yogurt company seeking to increase revenue 50% by end of 2001. It is considering 3 options: 1) Expand 8oz cups to supermarkets, 2) Expand 32oz cups nationally, or 3) Introduce children's multipacks in natural foods stores. Option 1 requires the highest spending but risks are high. Option 2 has lower risks but doubts about new users adopting large size. Option 3 leverages Natureview's brand strengths and relationships in natural foods stores, which are growing faster than supermarkets. Introducing multipacks could increase revenue 46.4% in 12 months, achieving the target through continued growth in the core natural channel without risks of expanding to supermarkets.
Higher quarterly profits (up 28% QoQ and 27% YoY) on strong loan origination and Credit Portfolio growth coupled with higher lending spreads and increased fee income. Stable quarterly dividends were declared while operating expenses remained stable QoQ. Asset quality remained strong with close to zero non-performing loans, while provisions were mostly associated with credit growth.
Starbucks is recommended as a buy with a target price of $63.25 per share. The recommendation is based on Starbucks' strong financial position and dividend growth, optimistic outlook in the China-Asia Pacific region, and sensitivity analysis. Starbucks enjoys stable revenue growth in the short term and substantial growth in the mid-term. It has a strong financial flexibility to respond to challenges. Risks include market risk, economic risk, and operational risk.
Chair speak report -PEPSICO(Dupont analysis with coke)Akshara S
This document provides information about PepsiCo and the beverage industry. It discusses PepsiCo's CEO, Indra Nooyi, and provides an industry profile that describes the beverage industry and dominant economic factors like market size and growth rate. It also analyzes the financial statements of major companies like PepsiCo, Coca-Cola, and Cadbury Schweppes and notes trends in the industry like increasing globalization and changing consumer preferences.
Hexagon Capital Alliance Food & Beverage Market Monitor- July 2022.pdfTaisPacheco2
Making the right decisions for your business starts with having the most accurate and current information available. Our Food & Beverage Market Monitor keeps you up to date on the events, trends and market forces that shape and guide your industry.
This is a brief review of Campbell soup's 10K. It is driven by questions to help you find the most important parts in a 10K report. All the questions are answered.
The document discusses the performance of the top 50 Fast Moving Consumer Goods (FMCG) companies in 2018. Some key points:
1. 2018 was a strong year as prior mergers and acquisitions began to drive organic growth and record profit margins for the FMCG Global 50 companies. Organic sales grew 3.2% driven by a return to organic volume growth.
2. Merger and acquisition activity in 2018 focused on shifting portfolios towards fast growth categories like coffee and consumer health, though total deal value fell due to a lack of mega-deals.Notable deals included Nestle acquiring Starbucks' consumer packaged goods and Unilever buying GSK's nutrition portfolio.
3. Profit margins for the
Business case that proposes a strategy for a U.S. based Wine manufacturer to enter in the Craft Beer Industry. The presentation also includes the highlight of US Alcoholic Beverage Industry and Customer appeal in the Beer Market.
This document provides an overview of Banco ABC Brasil, a leading credit provider to mid-sized and large companies in Brazil. It discusses the bank's history and ownership structure, business segments including large corporate lending, middle market lending, and payroll deductible loans. The document also outlines the bank's competitive advantages such as its sophisticated product portfolio and proven track record of growth. Financial information is presented including funding sources, profitability, indicators, and a vision for diversified future growth across business segments. Contact information is provided at the end for investor relations.
Similar to Asia Investment & Banking Conference 2019 – HSBC M&A Competition Champions (Axe Capital) (20)
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfcoingabbar
Introducing BONKMILLON - The Most Bonkers Meme Coin Yet
Let's be real for a second – the world of meme coins can feel like a bit of a circus at times. Every other day, there's a new token promising to take you "to the moon" or offering some groundbreaking utility that'll change the game forever. But how many of them actually deliver on that hype?
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
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Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
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2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
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Role of Information Technology in Revenue - Prof Oyedokun.pptx
Asia Investment & Banking Conference 2019 – HSBC M&A Competition Champions (Axe Capital)
1. FINAL
Asia Investment & Banking Conference 2019 – HSBC M&A Competition
The Kola Company (NYSE:KOLA): Acquiring a company as cheap as a cup of coffee
Amir Hisham
Amy Lui
Hashpal Singh
Katherine Lin
27th August, 2019
2. FINAL
Key Takeaway :
Executive Summary
Despite facing growth declination in recent times, The Kola Company has a huge opportunity to grow inorganicallyabroad, specifically in India, through acquiring Coffee Day
Enterprises Limited with a starting bid price of $3.23 which reflects a 200% premium on the current share price due to the stock’s recent plummet.
1
Current Situation
Slow Growth Trajectory
Kola Co. is in need of a new growth driver as the soft drinks industry
is expected to flatten out in the coming years. Hence, they are
looking to further venture into the coffee industry.
StrategicApproach
Kola Co.’s declining geographical revenue segments are hindering
the overall company’s growth. Furthermore, the company’s debt
situation only allows for a small scale transaction within the coffee
segment.
Other Considerations
Strategic and Restructuring Plans
Transaction will be followed by a three-phased corporate
restructuring exercise to allow to unlock shareholder value from the
removal of conglomerate discount.
Risks and Mitigation
This transaction faces a number of regulatory, operational and
post-transactional risks which can be mitigated by The Kola
Company’s management team.
Target Overview
Transaction Rationale
Coffee Day is the ideal target for Kola Co. as it fits all our screening
criteria for a target and it also contributes immensely to Kola Co.’s
future growth.
Synergy Realization
Synergies to be realized are estimated at $35.7m and are fully
realized by the Combined Group’s third year of operation.
Majority of the synergies will be derived from revenue
improvements.
Transaction Overview
Valuation Summary
Our recommended starting bid price for Coffee Day Enterprises
Limited is set at $3.23 which reflects a 200% premium to the current
share price.
Pro-FormaInformation
We recommend a 100% Cash funding as it is a small scale
transaction and the board does not want to give up any equity.
Furthermore, the transaction is to be implemented via a Target
Scheme of Arrangement.
Offer Price:
$xx.xx
Premium:
xx.x%
Slow Future
Growth
Hinders
Kola Co.’s
Outlook
Screening
Criteria
Identified
Our Ideal
Target
Implement
Operational
Initiatives in
Coffee Day
Segments
Valuation
of Target
Shows
Wide Price
Range
Offer Price:
$ 3.23
Premium:
200.0%
3. FINAL
Key Takeaway :
Notes :
Industry Revenue (in USD billions)
Recent Industry Developments1 – Global Soft Drink & Bottled Water Industry
Summary of Financials3
24-Jul-19
Kola Co. hits a record high after smashing
profit estimates on strong low-sugar drink
sales.
13-Feb-19
Overall sales volumes didn’t grow at all and
actually shrank in North America and at Kola
Co.’s signature sparkling drinks division.
07-Jun-18
Stock took a slight hit due to backlash from
announcing their new flavor called Kola
Clear.
In USD mm (unless stated) FY 14 FY 15 FY 16 FY 17 FY 18 LTM Jun-19 CAGR
Revenue 45,998.0 44,294.0 41,863.0 35,410.0 31,856.0 32,828.0 -7.2%
% YoY growth N/A -3.7% -5.5% -15.4% -10.0% -4.3%
Geographical Segment Revenue CAGR
EBITDA 12,843.0 12,210.0 11,510.0 10,338.0 10,594.0 10,736.0 -3.9%
% margin 27.9% 27.6% 27.5% 29.2% 33.3% 32.7%
Net Income 7,098.0 7,351.0 6,527.0 1,248.0 6,434.0 7,035.0 -0.2%
% margin 15.4% 16.6% 15.6% 3.5% 20.2% 21.4%
Debt to Equity (x) 1.37x 1.72x 1.97x 2.51x 2.29x 2.29x 12.1%
ROE (%) 22.3% 26.2% 26.7% 5.6% 35.4% 36.2% 11.4%
Acquirer Company Profile – The Kola Company (NYSE:KOLA)
Kola Co. is in need of a new growth driver as the soft drinks industry is expected to flatten out in the coming years. Hence, they are looking to further venture into the coffee
industry.
2
The Kola Company’s 3-Year Share Price History2 (as of 8th August 2019)
18%
20%
10%
12%
39%
North America
EMEA
Other (incl. Bottling Inv.)
Asia Pacific
Latin America
Geographical Segment Overview (in USD bn)
70
40
0
60
50
80
Share Price
(USD)
Jul-17 Jul-18 Jul-19
NYSE:KOLA
S&P 500
Current Price:
3-Year High:
3-Year Low:
USD 52.57
USD 54.17
USD 40.36
22%
17%
12%
9%
40%
13%
25%
17%
9%
36% 23%
21%
30%
15%
11%
24%
37%
16%
13%
10%
12%
36%
23%
16%
13%
5.1%
-1.4%
-2.0%
-3.6%
-27.9%
(1) IBIS World, Statista, Investor Presentations; (2) Bloomberg; (3) Capital IQ, Thomson One
1
Date Details
2
3
215
20172014 20162015 2018 2019F 2023F2020F 2021F 2022F 2024F
246
223 210 211 212 213 216 217 218 220
-3.6% +0.6%
Actual Forecast
Key Industry Drivers
Global per capita income1
Per capita healthcare expenditure2
World price of sugar3
GDP of the BRIC nations4
2015 2016 2017 2018
9.3
LTM2019
9.8 10.3 10.8 11.8 11.9
+5.1%
Recent Company Strategy
1 North America 2 EMEA
3 Asia Pacific 4 Latin America
LTM2015 20182016 2017 2019
8.3 7.6 7.3 7.4 7.7 7.7
-1.4%
2015 20192016 LTM2017 2018
5.7 5.3 5.3 5.2 5.2 5.2
-2.0%
20172015
3.9
2016 2018 LTM2019
4.14.7
3.8 4.0 4.0
-3.6%
A Asset Light Model
B Going Into Coffee
20162015 2017 LTM
15.1
2018 2019
18.1 17.5
8.1
3.2 4.2
-25.5%
+
Refranchising
Exercise
Acquisitionof
CostaCoffee
123
Bottling Inv. Revenue
4. FINAL
Key Takeaway :
Notes :
Strategic Approach – Problem Statement
Kola Co.’s declining geographical revenue segments are hindering the overall company’s growth. Furthermore, the company’s debt situation only allows for a small scale
transaction within the coffee segment.
(1) Capital IQ; (2) Statista; (3) Bloomberg
Kola Co.’s declining geographical revenue segment growth1
3
1
20172015 2016 2018 2019 LTM
5.3
5.7
5.3 5.2 5.2 5.2
-2.0%
Kola Co.’s Revenue in Asia (in USD billions)
2019
4.0
2015 2016 2017 2018 LTM
4.7
4.1 3.8 4.0 3.9
-3.6%
Kola Co.’s Revenue in Latin America (in USD billions)
Currently,3 of 4 geographicalrevenue segmentsare experiencinga steadydecline in growth.However,the
decline in EMEA’s segmentis being addressedwith the recent acquisitionof Costa Coffee but that leaves the
decline in the Asia and Latin America segmentsunaddressed.
Kola Co.’s desire to further consolidate within the coffee segment2
3a
Kola Co. wants to pair Costa Coffee’s expertise with other smaller scale players
3b
Other Out of Home
80%
Coffee Shops 20%
Out of Home NRTD RTD
$ 360 bn $ 125 bn $ 85 bn
Global Coffee and Tea Industry Market Size
(in USD billions)
Kola Co. has mentionedthat they want to furtherconsolidatewithin the coffee segmentin the next 12 to 18
monthsto build up their presence and market share.
32%
68%
Other Drinks
Hot Beverages
$ 485 bn and
growing 6%
annually
Kola Co.’s Hot Beverage Segment Growth Estimates
(in USD billions)
The companyalso showeddesire to pair up the newly acquiredCosta Coffee’s expertise with a smaller scaled
player as they believe the credentialsof Costa Coffeeas a brand.
Coffee Expertise
• Sourcing, roasting
• Coffee Express (fresh beans, fresh milk)
Brand Credentials
• Strong heritage, European / Italian roots
• Credibility to leverage with customers globally
Experience-Led
Brand Building
• Exceptional quality
• 5 million Costa Coffee Club members
Retail Footprint
• Second-largest coffee house in the world
• Location scouting, management
Factors Behind Costa’s Capabilities within the Coffee Segment
Real-TimeRitual Building1
Cash Flow for Reinvestment2
Avenue for Innovation3
Reinforce Brand Reputation4
Costa’s Retail Strengths
Kola Co.’s current gearing situation limits the scale of the transaction1
2
1.37x
1.72x
1.97x
2.50x
2.29x 2.29x
201920172015 20182016 LTM
+10.8%
Kola Co.’s Debt-to-Equity Ratio
26.6x
14.3x 15.7x
12.3x 11.5x 11.6x
20192015 20172016 2018 LTM
-15.3%
Kola Co.’s EBITDA-to-Interest Expense Ratio3
Kola Co.’s currentgearingsituationlimits the scale of the transactionwhich meansthat we can only screen for
smaller scaled players withinthe coffee industry.The board has also mentionedthat they prefer not to issue
shares as part of the transactionfunding.
5. FINAL
Key Takeaway :
Notes :
In USD mm (unless stated) FY 15 FY 16 FY 17 FY 18 FY 19 CAGR
Revenue 347.1 389.3 436.7 530.3 597.0 14.5%
% growth N/A 12.1% 12.2% 21.4% 12.6%
Segmental Revenue
Adj. EBITDA 72.3 89.4 94.6 108.7 115.2 12.4%
% margin 20.8% 23.0% 21.7% 20.5% 19.3%
Net Income -11.7 -5.9 6.6 14.9 17.9 N/A
% margin -3.4% -1.5% 1.5% 2.8% 3.0%
Debt to Equity (x) 4.05x 1.35x 1.57x 1.69x 2.07x -15.5%
ROE (%) -6.2% -0.5% 2.9% 5.1% 4.8% N/A
Target Company Profile – Coffee Day Enterprises Limited (BSE:539436)
Coffee Day is the ideal target for Kola Co. as it fits all our screening criteria for a target and it also contributes immensely to Kola Co.’s future growth. Due to the recent death of
the founder/chairman, the stock price plummeted which mounted pressure onto CCD management to sell.
(1) Company Website; (2) Bloomberg; (3) Capital IQ, Thomson One; (4) Company Filings
4
Company Overview1
• Along with its subsidiaries, Coffee Day Enterprises (CCD) is engaged in the operation of coffee outlets and other
coffee related businesses,the provision of logisticsservices, financial services and the management of real estate.
• Market Cap: INR 18.1 bn or USD 253.5 mm; Enterprise Value: INR 63.9 bn or USD 896.7 mm (as of 8th August 2019)
• Derives revenue from 4 operating segments (% of Revenue):
o Coffee and Related Business (47.1%): Operates a network of 1,722 café outlets under the Café Coffee Day
(CCD), The Lounge, The Square, and Xpress names in 245 cities
o Integrated Multimodal Logistics (35.1%): Provides integrated logistics services, such as port handling, road
and rail, logistics,container freight stations,and mining logistics.
o Financial Services (12.1%): Offers portfolio management & management, and investment advisory services.
o Real Estate and Hospitality (5.7%): Develops and manages technology parks and related infrastructure for
information technology (IT)/IT-enabledservices enterprises and as well as resorts and hotels.
Summary of Financials3
33%
9%
52%
6%
Coffee Related Business
Financial Services
Integrated Logistics
Real Estate & Hospitality
51%
28%
15%
7%
29%
51%
13%
6%
13%
50%
31%
6%
47%
35%
12%
6%
27-Jul-19
Stock price took a nose dive due to the
apparent death and suicide of
founder/chairman.
21-Sep-18
Increase in stock price due to news of CCD
acquiring MindTree.
19-Jan-18
Stock price increased due to the possibility of
Coffee Day’s founder selling their stake in
tech business owned by CCD
Coffee Day Enterprises Limited’s 3-Year Share Price History2 (as of 8th August 2019)
500
0
100
200
300
400
Share Price
(INR)
Jul-17 Jul-18 Jul-19
BSE:539436
SENSEX-BY
Current Price:
3-Year High:
3-Year Low:
INR 76.85
INR 349.40
INR 76.85 1
Date Details
2
3
12.4%
16.8%
24.1%
12.0%
CAGR
Coffee Day Enterprises Limited’s Segmental Overview4
1 2
3 4
179 222 256 303 286
20182015 2016 2017 2019
+12.4%
Coffee Related Business (in USD mm)
115 120 145
190 213
201820172015 2016 2019
+16.8%
Integrated Logistics (in USD mm)
31
63 67 80 74
20162015 2017 2018 2019
+24.1%
Financial Services (in USD mm)
22
28 30 34 35
20192015 2016 2017 2018
+12.0%
Real Estate & Hospitality (in USD mm)
1
3 2
6. FINAL
Key Takeaway :
Notes :
Transaction Rationale and Synergy Realization
Synergies to be realized are estimated at $35.7m and are fully realized by the Combined Group’s third year of operation. Majority of the synergies will be derived from revenue
improvements.
(1) Capital IQ; (2) Statista; (3) Bloomberg
Transaction Rationale
5
Estimated Average Annual EBITDA-Level Synergies
Situation Line Item Details Value
Costa India Market Share
• Allows Costa to improve market share through
leveraging CCD managerial experience $ 5.1m
CCD Product Expansion
and Regional Cross Selling
• Develop and sell CCD branded RTD coffee
• Introduce CCD coffee in foreign markets $ 14.4m
Costa and CCD
Employee Cost
• Employee redundancies.
• Board Member redundancies $ 7.4m
Costa and CCD Marketing /
Advertising Cost
• Leverage Different Distribution Channels
• Implement Better Go-to-Market Strategies $ 2.3m
Costa Supply Chain
Improvement
• Sourcing of cheaper raw materials.
• Leverage existing supplier relationships of CCD $ 6.1m
CCD Technology and
Systems Optimization
• Online Server Hosting
• Consolidation of Software and Hardware $ 0.5m
Implied Annual EBITDA
Improvement (FY 22)
+25.7% $ 35.7m
Revenue
Improvement
Cost Savings
Timeline of Synergies Realization
Total
2022
$ 26.8m
$ 35.7m
2021
$ 17.9m
2020 2023 2024
$ 35.7m $ 35.7m100% of Synergies Realized from FY 22 Onwards
75% of Synergies Realized in FY 21
50% of Synergies Realized in FY 20
One-off implementation cost of $ 17.1m
Scales Up Coffee Segment1
1 2 Fixes Asia Revenue Segment’s Growth
Recapture Lost Market Share in India2
3 4 Coffee Day’s Recent Pressure to Sell3
452 461 429 410 391 393
20172015 LTM2016 20192018
-2.8%
This acquisitionwill allow Kola to recapturetheir
fallingrevenue and market share within the Indian
beveragesegment.
Kola Co.’s Revenue in India (in USD millions)
5.3 5.2
LTM20162015 2017 2018 2019
5.7
5.3 5.2 5.2
-2.0%
Kola Co.’s Falling Revenue in Asia (in USD billions)
With CCD’s high growthrate (14.5% 5-Year CAGR),it
will allow Kola to offset/fixits declininggrowthwithin
its Asia segment.
2015 2016 2017 2018
1,148
2019
1,5801,365
1,745 1,836
+12.5%
Given that the boardof Kola Co. has said that they
want to further scale up the coffeesegment,this
acquisitionfacilitatesthat strategicdirection.
Costa and Coffee Day’s Combined Historical Revenue
(in USD millions)
Costa Coffee Café Coffee Day
Jul-17 Jul-18 Jul-19
Coffee Day’s Last 3 Years’ Stock Price (in INR)
400
0
100
500
200
300
CCD
SENSEX-BY
Since the deathof CCD’s founder/chairman,the
company’sshare price has taken a steep dive which
has pressuredthe companyto sell (for super cheap).
7. FINAL
Key Takeaway :
Notes :
Valuation Summary
We have included a multitude of valuation methodologies in the event of a third party bid from either a strategic or financial buyer thatmay come in during the bidding process.
Our recommended starting bid price for Coffee Day Enterprises Limited is set at $3.23 which reflects a 200% premium to the current share price.
(1) Yahoo Finance; (2) Bloomberg; (3) Thomson One; (4) Capital IQ; (5) Merger Market
6MarketValuationLBO
Current Share Price $ 1.08 Low Details
52-Week Range1
Premium to Spot2
Broker Price Targets3
Trading
Multiples4
EV/FY+1
Revenue
EV/FY+1
EBITDA
Price/FY+1
EPS
Perpetuity Growth
Method
Exit Multiple
Method
Perpetuity Growth
Method
Exit Multiple
Method
Precedent Transactions
EV/LTM EBITDA5
Leveraged Buyout Analysis
FundamentalValuation
DCF
Standalone
DCF
withSynergies
$ 1.08 $ 4.41
• Low: $1.08 on 08/08/2019
• High: $4.41 on 31/09/2018
$ 1.30 $ 1.51 • Reflects illustrative 20% - 40% premium to spot price of $1.08
$ 4.14 $ 4.55
• Low: Maybank Kim Eng
• High: Morgan Stanley
1.8x 2.4x • Screened Industry: 1) Coffee Shop Operators,
2) Logistics Service Providers,
3) Financial Services,
4) Real Estate Operators
• Screened Region: 1) Local (Indian Peers),
2) Regional (Asian Peers),
3) International (Global Peers)
12.8x 14.7x
34.1x 45.2x
1.8% 2.6% • Projection Period: 5 Years
• WACC: 7.4%
• Terminal Growth Rate: 2.2%
• Exit Multiple (EV/EBITDA): 7.8x7.3x 8.3x
1.8% 2.6%
• Projection Period: 5 Years
• WACC: 7.4%
• Terminal Growth Rate: 2.2%
• Exit Multiple (EV/EBITDA): 7.8x
• Annual Pretax Synergies: $35.7m (50%, 75%, 100% Annual Ramp-up)7.3x 8.3x
11.3x 12.8x
• Screened Industry: Coffee Shop Operators
• Screened Region: Local (India), Regional (Asia) and International
150.0% 180.0%
• Assumes 5-year holding period, 20% target IRR, 3.5x gearing, 150% - 180%
offer premium, 10.6x entry multiple and 12.0x exit multiple.
High
$ 1.08 $ 4.41
$ 1.51
$ 2.39 $ 4.40
$ 4.14 $ 4.55
$ 3.12 $ 4.08
$ 2.58 $ 3.43
$ 1.30
$ 1.02 $ 2.06
$ 1.54 $ 2.48
$ 3.34 $ 4.48
$ 2.94 $ 4.07
$ 2.99 $ 3.78
$ 2.69 $ 3.01
$ 3.23Bid Price
8. FINAL
Key Takeaway :
Notes :
Acquirer Target Adjustments
Pro-Forma
In USD mm (unless stated) KOLA CCD Increase (Decrease)
Cash and equivalents 5,645.0 331.4 (692.1) 5,284.3
Accounts receivable 3,852.0 219.4 4,071.4
Inventory 3,178.0 15.7 3,193.7
Deferred tax assets (current and long term) 2,617.0 10.8 (10.8) 2,617.0
Other current assets 15,865.0 174.0 16,039.0
PP&E 10,108.0 433.5 86.7 10,628.2
Intangibleassets 9,780.0 6.0 9.0 9,795.1
Goodwill 12,964.0 71.3 333.3 (71.3) 13,297.3
Other assets 24,338.0 314.1 24,652.1
Total Assets 88,347.0 1,576.3 429.0 (774.2) 89,578.1
Accounts payable 10,669.0 19.9 10,688.9
Accrued expenses & def rev. (current & non-current) 0.0 8.5 8.5
Revolver and current debt 15,118.0 544.5 15,662.5
Long term debt 30,445.0 372.1 30,817.1
Deferred tax liabilities 2,602.0 2.9 19.1 2,624.0
Other liabilities 9,709.0 185.2 9,894.2
Noncontrollinginterests 2,069.0 89.2 2,158.2
Shareholders' equity 17,735.0 354.1 (364.3) 17,724.8
Total Liabilities + Shareholder’s Equity 88,347.0 1,576.3 19.1 (364.3) 89,578.1
Transaction Overview – Funding and Pro-Forma
We recommend a 100% Cash funding as it is a small scale transactionand the board does not want to give up any equity. Furthermore, the transaction is to be implemented via a
Target Scheme of Arrangement.
(1) Our Analysis; Capital IQ; Thomson One
7
Transaction Highlights Pro-Forma Balance Sheet1
Item Details
Offer Price
• Offer price of $3.23 at 200% premium to current
share price of $1.08. (Offer Value US$ 681.9 mm)
Funding Mix
• 100% Cash as it is a small scale transaction and the
board does not want to give up any equity.
Transaction Metrics
• Implied Equity Value: US$ 681.9 mm
• Implied Enterprise Value: US$ 1,356.3 mm
Post-Transaction
Plans
• Transaction will be followed by a three-phased
corporate restructuring exercise to allow for better
utilization of resources.
Enterprise Value
• Combined group pro forma enterprise value of
approximately US$ 267.6 billion.
Net Debt
• Combined group pro forma net debt of approximately
US$ 43.4 billion.
Equity Value
• Combined group pro forma equity value of
approximately US$ 224.3 billion.
Gross Debt /
EBITDA
• Combined group pro forma Gross Debt / EBITDA of
approximately 4.57x.
Structure
Combined
Group
Metrics
Sources and Uses of Funds
In USD (unless stated) FY 2020F FY 2021F FY 2022F
Coffee Day EPS (Target) 0.08 0.08 0.13
Kola Co. EPS (Buyer) 1.64 2.10 2.26
Combined EPS 1.65 2.11 2.27
Accretion/Dilution ($) 0.01 0.01 0.01
Accretion/Dilution (%) 0.3% 0.3% 0.5%
Accretion/Dilution Analysis
0.3% 0.3%
0.5%
0.0%
0.2%
0.4%
0.6%
0.8%
2020F 2021F 2022F
Sources of Funds
Cash used to acquire target 681.9
Cash for fees 10.2
Total Sources 698.9
Uses of Funds
Cash to target 681.9
Deal fees (advisory, legal, and accounting) 10.2
Total Uses 698.9
Accretion/Dilution Chart
9. FINAL
Key Takeaway :
Notes :
Post-Transaction Strategic and Restructuring Plans – Overview
From our analysis,it shows that Coffee Day Enterprises Limited is immensely undervalueddue to the recent stock price declination and can easily benefit from restructuring which
will remove its conglomerate discount. Transaction will be followed by a three-phased corporate restructuring exercise.
(1) Capital IQ, Thomson One, Bloomberg
Indicative Sum-of-the Parts Valuation (in INR millions)
Coffee Related Business
Pursue organic top line growth
and margin expansion1 FY 19 – 21
Implementation
Timeline
FY 20 – 21
Pursue organic top line growth
and margin expansion
Top Line Growth Strategies:-
• Shift Coffee Day’s brand positioning
into the premium coffee segment.
• Begin introducing Coffee Day branded
RTD drinks.
Margin Expansion Strategies:-
• Implement supply chain improvement
initiatives.
• Improve marketing strategy.
1
8
Proposed Strategic and Restructuring Plans
Proposed disposal through
trade sale to strategic buyers3
Financial Services
Integrated Logistics
63,880
74,805
Financial
Services
Integrated
Logistics
R.E. &
Hospitality
Current EV Coffee
Business
HoldCo
Discount
20,039
SOTP EV
36,875
8,628
132,340
(8,008)
Real Estate & Hospitality
Coffee business’ property
carve-out followed by a
spin-off
2 FY 19 – 21
Proposed disposal through trade
sale to strategic buyers
• Proposed divestment of the
integrated logistics and financial
services segments to either strategic
or financial buyers.
• A list of potential buyers were
screened locally and globally.
• Expected timeline of divestments
will be 2 years after transaction
closes.
3
Coffee business’ property carve-
out followed by a spin-off
• Carve out coffee-related property
segment into the real estate and
hospitality operations segment.
• Leasebackproperties.
• Spin off real estate segment and
redistribute shares pro-rata.
• Scale up Spin Co. by injecting the
remaining Costa Coffee property
assets into new Spin Co.
2
~ ₹ 68.5 bn
or
~ $ 958.3 mn
unlocked
Existing
Enterprise
Value
SOTP Pure-play Implied Valuations
7.8x 22.3x 11.6x 11.1x 25.4x* (20%) 16.2x EV/EBITDA
(in INR mm, except per share data) EV/EBITDA SOTP Valuation
Coffee Business 22.3x 74,805
Plus: Integrated Logistics 11.6x 20,039
Plus: Real Estate & Hospitality Investments 11.1x 36,875
Plus: Financial Services 25.4x* 8,628
Less: HoldCo Discount (Logistics and Real Estate) (20%)* (8,008)
Indicative SOTP Enterprise Value 132,340
Less: Total Debt (65,474)
Less: Non-controlling Interest (6,371)
Plus: Cash and Cash Equivalents 23,669
Indicative SOTP Equity Value 84,164
Shares Outstanding (mm) 211.3
INR to USD Exchange Rate (08/08/19) 0.014
Indicative SOTP Share Price +73.7% USD 5.61
Proposed Bid/Offer Price USD 3.23
Calculations – Axe Capital’s Estimates1
10. FINAL
Key Takeaway :
Notes :
Strategic Buyers Financial Buyers
Post-Transaction Strategic and Restructuring Plans – In Depth Details
In depth details of our restructuring plan has been laid out and potential strategic/financial buyers have been identified for the soon-to-be divested segments.
(1) Capital IQ, Bloomberg, Yahoo Finance
9
Real Estate Segment: Post Carve-Out Spin-Off Plans
Integrated Logistics Segment: Divestment
Financial Services Segment: Divestment
2b
3a
3b
Coffee Segment: Top Line Growth & Margin Expansion
1
Real Estate Segment: Carve-Out and Leaseback
2a
Trading
Multiples1
EV/FY+1
Revenue
EV/FY+1
EBITDA
Precedent Transactions
EV/LTM EBITDA
Trading
Multiples1
EV/FY+1
Revenue
EV/FY+1
EBITDA
Precedent Transactions
EV/LTM EBITDA
Implied Transaction EV:
2.2x 3.8x
9.7x 16.9x
11.6x 17.3x
Low High$ 630 mm
0.8x 2.4x
12.7x 13.2x
14.2x 14.3x
Low HighImplied Transaction EV: $ 336 mm
Trading
Multiples1
Price/FY+1
Earnings
Price/FY+1
BV
Precedent Transactions
Price/LTM BV
12.5x 43.2x
2.1x 3.6x
2.3x 6.0x
Low HighImplied Transaction EV: $ 154 mm
Strategic Buyers Financial Buyers
Coffee
Business
Physical
Coffee Shops
Coffee
Business
Coffee
Business
Tech
Parks
Real Estate
Operation
Hospitality
Business
Coffee
Business
Coffee
Business
Coffee
Business
Tech Parks
Real Estate
Operation
Physical
Coffee Shops
Hospitality
Leaseback
Properties
Carve-Out into
Real Estate Segment
Step 1 Step 2
Coffee
Business
Coffee
Business
Coffee
Business
Real Estate
Operation
Coffee
Business
Real Estate
Spin Co.
Inject Spin Co. with
Costa’s Physical Stores
in India
Step 2Step 1
Spin-Off and
Redistribute
Shares Pro-Rata
ImpliedValuationImpliedValuationImpliedValuation
INDIAGLOBALINDIAGLOBAL
Details Strategic Implementation
Shift Coffee Day’s
Brand Positioning
• Costa Coffee’s expertise in the premium
coffee segment allows Coffee Day to
introduce premium store formats.
Introduce Product
Diversification
• Kola can start developing Coffee Day
branded ready-to-drink (RTD) products
to be sold in local retail stores.
Improve Supply Chain
Efficiency
• With Kola’s extensive managerial
experience, we can implement a much
leaner operation within its supply chain.
Improve Marketing
Strategy Effectiveness
• Using data analytics and Kola’s longtime
marketing experience to increase Coffee
Day’s marketing strategy.
TopLineGrowthMarginExpansion
11. FINAL
Key Takeaway :
Notes :
Risks & Mitigation
This transaction faces a number of regulatory, operational and post-transactional risks which can be mitigated by The Kola Company’s management team.
(1) Company Filings; IBIS World
Scenario Analysis
Highly
Likely
Not
Likely
High ImpactLow Impact
R2
O1
O2
T2
T1
R1
10
RegulatoryRisks
SEC Concerns (R1)
FTC Concerns (R2)
Operational Risks
Inability to Carve Out Real Estate Co. (O1)
Operating Initiatives Not Fully Realized(O2)
Post-Transaction Risks
Market Value Decline Post Spin-Off (T1)
Unexpected Costs of Restructuring(T2)
Transaction Risks1
Situation Details Mitigation
SEC Concerns
• SEC may post questions on the
transparency of the transactionand
the controlling stakeholder’s identity
post-buyout.
• Comply with disclosure requirements as
directed by legal advisors.
• Thoroughly discuss the post-buyout
ownership and leadership structure.
FTC Concerns
• FTC may block the deal due to
suspicion of opportunistic
exploitation of inside information
• Consult legal and financial advisor, strictly
follow the detailed disclosure and approval
procedures.
Inability to Carve
Out Real Estate
Co.
• There might be complicationsthat
can arise from the attempted carve-
out of the property assets and also
from the following spin-off.
• Kola Co. can hire the best restructuring
firms to avoid any complicationsto arise
during the final phase of real estate setup.
Operating
Initiatives Not
Fully Realized
• Uncertainty in realization of operating
initiatives and business
improvements may negatively impact
business performance.
• Offer via Scheme of Arrangement enables
external parties to conduct thorough due
diligence prior to transaction.
Market Value
Decline Post
Spin-Off
• Risk that combined market value of
new CCD and Real Estateentity will
be less than market value of CCD
immediately prior to the carve-out.
• Delayed implementation period allows Kola
Co. to rectify all shortfalls in value leakages
through in-depth quarterly review.
Unexpected
Costs of
Restructuring
• Restructuringand operational
initiatives may lead to unexpected
costs which negatively affect
earnings.
• Kola Co. should put in place transition
programs prior to restructuringto ensure
smoother flow in retraining employees and
other intersegment related matters.
13. FINAL
Key Takeaway :
Notes :
List of Potential 3rd Party Bidders/Interlopers
Not applicable for appendices.
1. Company websites; 2. Capital IQ, Thomson One; 3. Scale from 1-5 (Higher and darker is better)
Strategic Fit
List of Potential Interlopers Likeliness to Bid3
Company/Firm Business Overview1 Rationale Financials2 (USD mm)
PepsiCo.
PepsiCo, Inc. operates as a food and beverage company worldwide. The
company is mostly known for its main product offering within the soft
drink segmentlike Pepsi,Gatoradeand MountainDew.
PepsiCo. will be looking to
follow suit and expand into
coffee as their soft drink sales
have been declining.
• LTM Revenue – $65,342
• LTM EBIT – $10,637
• Total Assets – $75,084
Starbucks Corp.
Starbucks Corporation, together with its subsidiaries, operates as a
roaster,marketer,and retailerof specialtycoffeeworldwide.
Starbucks might be looking to
gain market share within India
(one of its final frontiers)
• LTM Revenue – $26,065
• LTM EBIT – $3,830
• Total Assets – $20,894
Luckin Coffee
Luckin Coffee Inc. engages in the retail sale of freshly brewed drinks,
and pre-made food and beverage items in the People's Republic of
China. It offers freshly brewed drinks, including freshly brewed coffee
and non-coffeedrinks
The company is looking outside
its Chinese borders to grow
and CCD might give them a
very cheap solution.
• LTM Revenue – $292
• LTM EBIT – ($328)
• Total Assets – $1,141
KOMEDA Hldgs.
KOMEDA Holdings Co., Ltd. operates a chain of coffee shops in Japan. It
is also involved in the manufacture and sale of breads; and sub-lease of
stores.
The company is looking to
expand outside of Japan as
domestic revenue is declining.
• LTM Revenue – $290
• LTM EBIT – $73
• Total Assets – $872
Blackstone
The Blackstone Group is an alternative asset management firm
specializing in real estate, private equity, hedge fund solutions, credit,
secondary funds of funds, and multi-assetclass strategies.
Heavy interest in CCD’s real
estate segment and might look
to sell delever the company.
• AUM – $472,000
KKR
KKR & Co. Inc. is a private equity and real estate investment firm
specializing in direct and fund of fund investments; mainly through
acquisitions,leveragedbuyoutsand growthequity investments.
KKR is looking to invest in
Indian retail brands from FY18
onwards.
• AUM – $148,500
TATA Capital
Tata Capital is a private equity and venture capital arm of Tata Capital
Limited specializing in middle market, buyouts, turnaround, and growth
capitalinvestmentsin stressedsmall and mediumsized enterprises.
The company is known to
invest in distressed Indian
enterprises.
• AUM – $11,240
Total
4 3 3 5 2 17
5 3 2 5 2 17
5 2 2 2 4 15
5 2 2 3 2 14
3 4 5 5 5 22
3 4 4 5 5 21
2 5 4 3 4 18
1 Regional Expertise2 Recent M&A Activity3 Balance Sheet4 Interest in Other Segments5
1 2 3 4 5
A
14. FINAL
Key Takeaway :
Valuation: Trading Comparables Analysis
Not applicable for appendices.
Company Name
Market Cap
(USD mm)
Enterprise Value
(USD mm)
EV/Revenue EV/EBITDA P/E
LTM FY+1 FY+2 LTM FY+1 FY+2 LTM FY+1 FY+2
Indian Peers
Dabur India Limited 10,930.9 10,857.0 8.80x 8.15x 7.26x 42.90x 38.55x 33.68x 52.70x 47.05x 40.72x
Godrej Consumer Products Limited 9,411.6 9,691.4 6.80x 6.28x 5.66x 32.40x 29.28x 25.79x 28.50x 40.87x 35.33x
Jubilant FoodWorks Limited 2,192.2 2,097.4 4.10x 3.72x 3.19x 22.10x 15.37x 13.59x 48.90x 44.63x 35.47x
Westlife Development Limited 591.0 607.7 3.00x 2.71x 2.29x 34.60x 28.67x 21.04x 136.30x 103.65x 53.26x
International Peers
Starbucks Corporation 115,271.1 121,596.4 4.70x 4.60x 4.28x 21.90x 21.32x 19.08x 34.40x 34.06x 30.89x
Café de Coral Holdings Limited 1,891.8 1,779.5 1.60x 1.55x 1.45x 13.40x 12.79x 11.80x 25.30x 23.83x 22.52x
KOMEDA Holdings Co., Ltd. 849.5 1,315.2 4.50x 4.43x 4.12x 16.40x 16.47x 15.68x 17.40x 16.64x 15.96x
Average 4.79x 4.49x 4.04x 26.24x 23.21x 20.09x 49.07x 44.39x 33.45x
Lower Quartile 3.55x 3.22x 2.74x 19.15x 15.92x 14.64x 26.90x 28.95x 26.71x
Median 4.50x 4.43x 4.12x 22.10x 21.32x 19.08x 34.40x 40.87x 35.33x
Upper Quartile 5.75x 5.44x 4.97x 33.50x 28.98x 23.42x 50.80x 45.84x 38.10x
Revenue
(INR mm)
EV/FY+1 Revenue Enterprise Value
Low High Low High
47,321.1 1.78x 3.22x 84,231.6 152,137.3
Enterprise Value 84,231.6 152,137.3
Less: Total Debt 65,474 65,474
Less: Non-controlling Interest 6,371 6,371
Plus: Cash and Cash Equivalents 23,669 23,669
Implied Equity Value 36,056 103,961
Shares Outstanding (mm) 211.3 211.3
INR to USD Exchange Rate 0.014 0.014
Implied Value per Share $2.39 $6.89
FY+1 EBITDA
(INR mm)
EV/FY+1 EBITDA Enterprise Value
Low High Low High
7,450 12.79x 14.73x 95,285.5 109,701.3
Enterprise Value 95,285.5 109,701.3
Less: Total Debt 65,474 65,474
Less: Non-controlling Interest 6,371 6,371
Plus: Cash and Cash Equivalents 23,669 23,669
Implied Equity Value 47,110 61,525
Shares Outstanding (mm) 211.3 211.3
INR to USD Exchange Rate 0.014 0.014
Implied Value per Share $3.12 $4.08
Net Income
(INR mm)
Price/FY+1 Earnings Equity Value
Low High Low High
1,143 34.06x 45.24x 38,941 51,717
Implied Equity Value 38,941 51,717
Shares Outstanding (mm) 211.3 211.3
INR to USD Exchange Rate 0.014 0.014
Implied Value per Share $2.58 $3.43
EV/FY+1 Revenue Multiple EV/FY+1 EBITDA Multiple Price/FY+1 Earnings Multiple
B
19. FINAL
Key Takeaway :
Valuation: Precedent Transactions Analysis
Not applicable for appendices.
Target Buyer Date Total Transaction Value (USD mm) EV/LTM Revenue EV/LTM EBITDA
Costa Limited The Coca-Cola Company (NYSE:KO) 31-Aug-18 5,061.7 2.33x 16.37x
OldTown Berhad Jacobs Douwe Egberts B.V. 11-Dec-17 363.7 1.82x 12.78x
Loungers plc (AIM:LGRS) Lion Capital LLP 20-Dec-16 191.4 2.78x 21.28x
Nutricafés, S.A. Segafredo Zanetti - ComercializaCAo E DistribuiCAo De CafE, S.A. 12-Jul-16 82.5 2.19x 8.56x
Starbucks Coffee Japan, Ltd. SCI Ventures, S.L. 23-Sep-14 406.9 1.92x 11.76x
Max's Group, Inc. (PSE:MAXS) The Real American Doughnut Inc. & others 17-Jan-14 18.4 1.94x 13.16x
Tsit Wing International Holdings Limited Wong's Brothers Consortium Inc. 11-Jun-13 54.8 2.62x 7.99x
Caribou Coffee Company, Inc. BDT Capital Partners, LLC; JAB Beech Inc. 17-Dec-12 338.5 2.29x 11.34x
Peet's Coffee & Tea, Inc. JAB Holdings B.V.; BDT Capital Partners, LLC 23-Jul-12 1,009.7 3.49x 22.11x
Average 2.38x 13.93x
Lower Quartile 1.94x 11.34x
Median 2.29x 12.78x
Upper Quartile 2.62x 16.37x
LTM Revenue
(INR mm)
EV/LTM Revenue Enterprise Value
Low High Low High
42,645 1.94x 2.29x 82,730.9 97,656.6
Enterprise Value 82,730.9 97,656.6
Less: Total Debt 65,474 65,474
Less: Non-controlling Interest 6,371 6,371
Plus: Cash and Cash Equivalents 23,669 23,669
Implied Equity Value 34,555 49,481
Shares Outstanding (mm) 211.3 211.3
INR to USD Exchange Rate 0.014 0.014
Implied Value per Share $2.29 $3.28
LTM EBITDA
(INR mm)
EV/LTM EBITDA Enterprise Value
Low High Low High
8,229 11.34x 12.78x 93,312.3 105,161.5
Enterprise Value 93,312.3 105,161.5
Less: Total Debt 65,474 65,474
Less: Non-controlling Interest 6,371 6,371
Plus: Cash and Cash Equivalents 23,669 23,669
Implied Equity Value 45,136 56,986
Shares Outstanding (mm) 211.3 211.3
INR to USD Exchange Rate 0.014 0.014
Implied Value per Share $2.99 $3.78
EV/LTM Revenue Multiple EV/LTM EBITDA Multiple
G
20. FINAL
Key Takeaway :
Leveraged Buyout Analysis Details
Valuation: Leveraged Buyout Analysis
Not applicable for appendices.
Uses of Funds
Buyout of equity 636.55
Offer premium 180.00%
Offer price/share 3.01
Diluted shares outstanding 211.30
TransactionFees 9.55
Financing Fees 6.37
Old Co. debt refinanced 916.6
Total uses 1,569.09
Sources of Funds
Loans
Tranche A 235.36
Tranche B 235.36
High yield bonds
Mezzanine 156.91
Equity
Sponsor Equity 610.09
Existing cash on B/S 331.37
Total sources 1,569.09
Current Valuation
EBITDA 115.20
EV 1,221.81
EV/EBITDA 10.6x
Exit Assumptions (5 years later)
EV/EBITDA 12.0x
EBITDA 192.61
Enterprise value 2,311.33
Debt 412.0
Cash 120.0
Equity value 2,019.33
Sponsor Equity 2,019.3
Capital Structure
Returns to Financial Investor FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 (Exit)
Common Equity
Initial Investment: (610.1)
Dividends: 213.1
Equity: 2,019.3
Total Cash Flows: (610.1) - 213.1 - - 2,019.3
Money-on-Money (MoM) Multiple: 3.7x
Internal Rate of Return (IRR): 27.0%
Estimated Financial Investor Returns Analysis
235
1,238
235
157
610
Tranche BTranche A Mezzanine Sponsor Equity Total
Debt: USD 627.6m
(50.7%)
Equity: USD 610.1m
(49.3%)
H
21. FINAL
Key Takeaway :
Synergy Calculations (Base Case)
Not applicable for appendices.
Cost - Employee Cost Synergy
CCD Total CCD Employees in India 6,342
Total Employee Expense in India 76.9
Average cost per employee 0.012
Total board members 6.0
Board members expense 0.029
Average cost per board member 0.0049
KOLA Total Coke and Costa Employees in India 1,450
Total Employee Expense in India 28.0
Average cost per employee 0.019
Merged Entity Employee Count (Before Redundancy) 7,792.0
Average Cost per Employee 0.013
% Employeesmade redundant 7%
Employee Count (After Redundancy) 7,246.6
Total Employee Cost without Redundancy 104.9
Total Employee Cost with Redundancy 97.5
Total employee cost savings 7.3
# of CCD board member made redundant 6.0
Total board members cost savings 0.03
Total Employee Cost Savings 7.4
Cost - Supply Chain Improvement/COGS Improvement
CCD COGS (as % of revenue) 41.5%
KOLA Costa's India Operation COGS (as % of revenue) 53.5%
Merged Entity KO Coffee Revenue FY21F attributed to India 50.8
COGS (before) 27.2
COGS (after) 21.1
Total COGS Savings 6.1
Cost - Technology Integration and Systems Optimization
CCD Technology Cost 1.8
KOLA Technology Cost for Coke and Costa in India 3.4
Merged Entity Total Technology Cost without reduction 5.2
% Expectedcost savings 10%
Total Technology cost with reduction 4.7
Total Technology Cost Savings 0.5
Cost - Marketing and Advertising
CCD Marketing and Advertising Cost 6.8
KOLA Mktg. and Adv. Cost for Coke & Costa in India 15.9
Merged Entity Total Marketing Cost without reduction 22.7
% Expectedcost savings 10%
Total Marketing cost with reduction 20.4
Total Marketing & Advertising Cost Savings 2.3
Total Cost Synergies at EBITDA Level $ 16.25
Revenue - Improvement of Market Share
CCD Current market share in India 45.30%
KOLA Current market share in India (Costa) 3.50%
Merged Entity
Additional market share boost (net of
cannibalization) 7.00%
Costa Revenue FY19F attributedto India 25.4
w/ added market share FY 21F 50.8
Additional Revenue from increase in yield 25.4
Net additional EBITDA (20.1% Margin) 5.1
Revenue - Product Expansion & Cross Selling
Merged Entity Additional RTD CCD Offering 42.9
% Expectedrevenueboost 15%
Net additional EBITDA (20.1% Margin) 8.6
RTD CCD Introduction in Foreign Markets 28.6
% Expectedrevenueboost 10%
Net additional EBITDA (20.1% Margin) 5.7
Total Revenue Synergies at EBITDA Level $ 19.47
Total Synergies at EBITDA Level
Cost Synergies Employee Cost Savings 7.4
Supply Chain Improvement 6.1
Technology and Systems Cost Savings 0.5
Marketing and Advertising Cost Savings 2.3
Revenue Synergies Market Share Improvement 5.1
Product Offering Expansion 8.6
Product Cross Selling 5.7
Total Cost Synergies at EBITDA Level $ 35.72
I
22. FINAL
Key Takeaway :
Synergy Calculations (Bull Case)
Not applicable for appendices.
Cost - Employee Cost Synergy
CCD Total CCD Employees in India 6,342
Total Employee Expense in India 76.9
Average cost per employee 0.012
Total board members 6.0
Board members expense 0.029
Average cost per board member 0.0049
KOLA Total Coke and Costa Employees in India 1,450
Total Employee Expense in India 28.0
Average cost per employee 0.019
Merged Entity Employee Count (Before Redundancy) 7,792.0
Average Cost per Employee 0.013
% Employeesmade redundant 9%
Employee Count (After Redundancy) 7,090.7
Total Employee Cost without Redundancy 104.9
Total Employee Cost with Redundancy 95.4
Total employee cost savings 9.4
# of CCD board member made redundant 6.0
Total board members cost savings 0.03
Total Employee Cost Savings 9.5
Cost - Supply Chain Improvement/COGS Improvement
CCD COGS (as % of revenue) 41.5%
KOLA Costa's India Operation COGS (as % of revenue) 53.5%
Merged Entity KO Coffee Revenue FY21F attributed to India 61.7
COGS (before) 33.0
COGS (after) 24.3
Total COGS Savings 8.7
Cost - Technology Integration and Systems Optimization
CCD Technology Cost 1.8
KOLA Technology Cost for Coke and Costa in India 3.4
Merged Entity Total Technology Cost without reduction 5.2
% Expectedcost savings 12%
Total Technology cost with reduction 4.6
Total Technology Cost Savings 0.6
Cost - Marketing and Advertising
CCD Marketing and Advertising Cost 6.8
KOLA Mktg. and Adv. Cost for Coke & Costa in India 15.9
Merged Entity Total Marketing Cost without reduction 22.7
% Expectedcost savings 12%
Total Marketing cost with reduction 20.0
Total Marketing & Advertising Cost Savings 2.7
Total Cost Synergies at EBITDA Level $ 21.49
Revenue - Improvement of Market Share
CCD Current market share in India 45.30%
KOLA Current market share in India (Costa) 3.50%
Merged Entity
Additional market share boost (net of
cannibalization) 8.50%
Costa Revenue FY19F attributedto India 25.4
w/ added market share FY 21F 61.7
Additional Revenue from increase in yield 36.3
Net additional EBITDA (20.1% Margin) 7.3
Revenue - Product Expansion & Cross Selling
Merged Entity Additional RTD CCD Offering 42.9
% Expectedrevenueboost 15%
Net additional EBITDA (20.1% Margin) 8.6
RTD CCD Introduction in Foreign Markets 28.6
% Expectedrevenueboost 10%
Net additional EBITDA (20.1% Margin) 5.7
Total Revenue Synergies at EBITDA Level $ 21.66
Total Synergies at EBITDA Level
Cost Synergies Employee Cost Savings 9.5
Supply Chain Improvement 8.7
Technology and Systems Cost Savings 0.6
Marketing and Advertising Cost Savings 2.7
Revenue Synergies Market Share Improvement 7.4
Product Offering Expansion 8.6
Product Cross Selling 5.7
Total Cost Synergies at EBITDA Level $ 43.15
J
23. FINAL
Key Takeaway :
Synergy Calculations (Bear Case)
Not applicable for appendices.
Cost - Employee Cost Synergy
CCD Total CCD Employees in India 6,342
Total Employee Expense in India 76.9
Average cost per employee 0.012
Total board members 6.0
Board members expense 0.029
Average cost per board member 0.0049
KOLA Total Coke and Costa Employees in India 1,450
Total Employee Expense in India 28.0
Average cost per employee 0.019
Merged Entity Employee Count (Before Redundancy) 7,792.0
Average Cost per Employee 0.013
% Employeesmade redundant 5%
Employee Count (After Redundancy) 7,402.4
Total Employee Cost without Redundancy 104.9
Total Employee Cost with Redundancy 99.6
Total employee cost savings 5.2
# of CCD board member made redundant 6.0
Total board members cost savings 0.03
Total Employee Cost Savings 5.3
Cost - Supply Chain Improvement/COGS Improvement
CCD COGS (as % of revenue) 41.5%
KOLA Costa's India Operation COGS (as % of revenue) 53.5%
Merged Entity KO Coffee Revenue FY21F attributed to India 36.3
COGS (before) 19.4
COGS (after) 17.2
Total COGS Savings 2.2
Cost - Technology Integration and Systems Optimization
CCD Technology Cost 1.8
KOLA Technology Cost for Coke and Costa in India 3.4
Merged Entity Total Technology Cost without reduction 5.2
% Expectedcost savings 10%
Total Technology cost with reduction 5.0
Total Technology Cost Savings 0.3
Cost - Marketing and Advertising
CCD Marketing and Advertising Cost 6.8
KOLA Mktg. and Adv. Cost for Coke & Costa in India 15.9
Merged Entity Total Marketing Cost without reduction 22.7
% Expectedcost savings 7%
Total Marketing cost with reduction 21.1
Total Marketing & Advertising Cost Savings 1.6
Total Cost Synergies at EBITDA Level $ 9.29
Revenue - Improvement of Market Share
CCD Current market share in India 45.30%
KOLA Current market share in India (Costa) 3.50%
Merged Entity
Additional market share boost (net of
cannibalization) 5.00%
Costa Revenue FY19F attributedto India 25.4
w/ added market share FY 21F 36.3
Additional Revenue from increase in yield 10.9
Net additional EBITDA (20.1% Margin) 2.2
Revenue - Product Expansion & Cross Selling
Merged Entity Additional RTD CCD Offering 34.3
% Expectedrevenueboost 12%
Net additional EBITDA (20.1% Margin) 6.9
RTD CCD Introduction in Foreign Markets 22.9
% Expectedrevenueboost 8%
Net additional EBITDA (20.1% Margin) 4.6
Total Revenue Synergies at EBITDA Level $ 13.68
Total Synergies at EBITDA Level
Cost Synergies Employee Cost Savings 5.3
Supply Chain Improvement 2.2
Technology and Systems Cost Savings 0.3
Marketing and Advertising Cost Savings 1.6
Revenue Synergies Market Share Improvement 2.2
Product Offering Expansion 6.9
Product Cross Selling 4.6
Total Cost Synergies at EBITDA Level $ 22.98
K
24. FINAL
Key Takeaway :
Merger Model (Part A)
Not applicable for appendices.
General information
Current date 08-08-19
Acquirer
Name The Coca-Cola Company
Ticker KO
Latest filing date 31-03-19
Filing type (10K or 10Q) 10-Q
Current share price $52.57
Target
Name Coffee Day Enterprises
Ticker CCD
Latest filing date 31-03-19
Filing type (10K or 10Q) 10K
Current Share Price (as at 08-Aug-2019) $1.08
% Offer premium 200%
Offer price per share $3.23
Diluted shares outstanding(MM) 211.3
Offer value 681.9
Deal structure
% Stock 0%
% Cash 100%
Tax structure Stock sale
Acquirer shares issued in transaction 0.0
Nominal exchangeratio 0.061x
Actual exchangeratio 0.000x
Transaction Assumptions
Other assumptions
Deal fees as % of offer value 1.50%
Deal fees 10.2
Assumed annual pretax cost synergies 35.7
The Coca-Cola Company calendar year ending 2019 EBITDA 10,687.0
Coffee Day Enterprises calendar year ending 2019 EBITDA 115.2
Acquirer tax rate 20.00%
Target tax rate 31.00%
Transaction financing
% Cash considerationfinanced with debt 0%
% Cash considerationfinanced with excess cash 100%
Acquirer new borrowing 0.0
Acquirer excess cash used 681.9
% of total acquirercash balance 12.1%
Treatment of target debt Assumed
Debt to be refinanced 0.0
Total acquisition financing 0.0
Acquirer available cash 5,645.0
Target debt outstanding 916.6
Term of loan 10 years
Financing fees as % of acquisitionfinancing 1.00%
Financing fees -
Annual financing fee amortization 0.0
Interest rate on new debt 4.0%
Interest earned on cash 1.0%
INR/USDSpot Rate (08 Aug 2018) 0.0140
Asset write-ups
Tangible assets
Book value of target PP&E 433.5
% Write-up 20%
Asset write-up 86.7
Useful life 20 years
Incremental depreciationexpense 4.3
Incremental deferred tax liabilities 17.3
Intangibleassets
Book value of target intangible assets 6.0
% Write-up 150.0%
Asset write-up 9
Useful life 115 years
Incremental amortizationexpense 0.1
Incremental deferred tax liabilities 1.8
Purchase Price Allocation
Targetassets - book value 1,576.3
Plus: PP&Ewrite ups 86.7
Plus: Intangibleasset write ups 9
Less: Write off of target goodwill (71.3)
Less: Write off of target deferred tax assets (10.8)
Target assets - fair market value 1,589.9
Targetliabilities- book value 1,222.2
Less: Write off of target deferred tax liabilities 0.0
Plus: New deferred tax liabilitiescreated 19.1
Target liabilities - fair market value 1,241.3
Target net book value - fair market value 348.6
Offer value 681.9
Goodwill created in transaction 333.3
Write-Ups and Purchase Price Allocation
L
25. FINAL
Key Takeaway :
Merger Model (Part B)
Not applicable for appendices.
Accretion / Dilution Analysis Accretion / Dilution Sensitivity Analysis (Synergy Cases)
EPS Accounting: GAAP EPS FY 2020 FY 2021 FY 2022
31-03-20 31-03-21 31-03-22
Acquirer
Net income 6,744.0 9,029.4 9,682.8
GAAP EPS 1.64 2.10 2.26
Diluted shares outstanding(weightedavg.) 4,123.6 4,300.7 4,289.2
Target
Net income 17.9 16.0 26.8
GAAP EPS 0.08 0.08 0.13
Diluted shares outstanding(weightedavg.) 211.3 208.3 205.3
Transactionrelated expenses/income
Less: Interestexpense from new deal debt - - -
Less: Interestincome on cash forgone (6.9) (6.9) (6.9)
Plus: Synergies 17.9 26.8 35.7
Less: IncrementalD&A expense (4.4) (4.4) (4.4)
Less: Financing fee amortization 0.0 0.0 0.0
Taxes (assumed at acquirer's rate) (1.3) (3.1) (4.9)
Total after tax transaction related income/ (expenses) 5.2 12.4 19.5
Pro Forma GAAP EPS 6,767.1 9,057.8 9,729.1
Pro Forma Shares Outstanding 4,123.6 4,300.7 4,289.2
Pro forma GAAP EPS $1.64 $2.11 $2.27
Acquirer standalone EPS $1.64 $2.10 $2.26
Accretion / Dilution per share $0.01 $0.01 $0.01
Accretion / Dilution % 0.3% 0.3% 0.5%
Additional pretax synergies required to breakeven 0.0 0.0 0.0
Pro forma GAAP EPS $1.64 $2.11 $2.27
Acquirer standalone EPS $1.64 $2.10 $2.26
Accretion / Dilution per share $0.01 $0.01 $0.01
Accretion / Dilution % 0.3% 0.3% 0.5%
20212020 2022
$ 17.9m
$ 26.8m
$ 35.7m
Base Case
Pro forma GAAP EPS $1.64 $2.11 $2.27
Acquirer standalone EPS $1.64 $2.10 $2.26
Accretion / Dilution per share $0.01 $0.01 $0.01
Accretion / Dilution % 0.4% 0.4% 0.5%
20212020 2022
$ 21.6m
$ 32.4m
$ 43.2m
Bull Case
Synergies Realized
Pro forma GAAP EPS $1.64 $2.10 $2.27
Acquirer standalone EPS $1.64 $2.10 $2.26
Accretion / Dilution per share $0.00 $0.00 $0.01
Accretion / Dilution % 0.3% 0.2% 0.4%
20212020 2022
$ 11.5m
$ 17.2m
$ 23.0m
Bear Case
M