CASE STUDY Merger of Perdigao & Sadia TABLE OF CONTENTS Food Sector 1 Analysis of Perdigao 2 Analysis of Sadia 3 Motives for Merger & Strategic Fit 3 Quantitative Analysis 5 Treatment of Tag-Along Shares 5 DCF Valuation 6 Weighted Average Cost of Capital 6 Stand-Alone Scenario 7 Offer Price & Swap Ratio 7 Sensitivity Analysis 8 Base Merger 8 Optimistic Merger 9 Pessimistic Merger 9 Scenario Analysis 9 Plan to Action
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Case 12-9 Rough Waters Ahead - IFRS 1. Cruise Ship belongs to the assets that apply to IAS 36 Impairment rule IAS 36-2 states the Impairment of Assets rule shall be applied in accounting for the impairment of all assets, other than: a) Inventories b) Assets arising from construction contracts c) Deferred tax assets d) Assets arising from employee benefits e) Financial assets that are within the
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“anticipate no profit, but anticipate all losses” (e.g., Bliss, 1924). Anticipating profits means recognizing profits before there is a verifiable legal claim to the revenues generating those profits. Conservatism does not imply that all revenue cash flows should be received before profits are recognized. Thus the issue is one of verifiability. In the empirical literature the adage is interpreted as representing “the accountant’s tendency to require a higher degree of verification to recognize
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stock price are cash flow, timing, and risk. The Importance of Cash Flow: In business, cash is what pays the bills. It is also what the firm receives in exchange for its products and services. Cash is therefore of ultimate importance, and the expectation that the firm will generate cash in the future is one of the factors that gives the firm its value.(page 9-10) The Effect of Timing on Cash Flows: Owners and potential investors look at when firms can expect to receive cash and when they can
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to finance the entire bid with debt, and should thus choose the other option with 75% debt financing. An overview of the valuation, when using the $75 million debt to finance the bid can be seen in exhibit 1. By estimating Pinkerton’s future cash flow, we have taken the task force prediction and estimation into account when calculating
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the same industry. ACE estimates its free cash flows that will be available to the enterprise next year at $5,200,000. Since the venture is now in its maturity stage, ACE’s free cash flows are expected to continue to grow at a 6 percent annual compound growth rate in the future. A weighted average cost of capital (WACC) for the venture is estimated at 15 percent. Interest-bearing debt owed by ACE is $17.5 million. In addition, the venture has surplus cash of $4 million. ACE currently has five million
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Mercury Athletic Footwear: Valuing the Opportunity Team 10 / Mergers and Acquisitions West Coast Fashions, Inc (WCF) was a large business, which dealt with men’s and women’s apparel. One of their segments was Mercury Athletic Footwear. WCF wanted to dispose off this segment. They just wanted to divest because they wanted to focus more on their core business and move it up to the elite class. John Liedtke was the Business Development Head at that time in Active Gear Inc. He had a clear idea
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Maxwell Ltd and Punggol Limited how to use investment appraisal techniques to evaluate a project’s viability and compare the difference of NPV and IRR. The team have to select and use appropriate forecasting methods to enable cost and revenue of cash flows forecasts to be constructed for Maxwell Ltd, adjusting for expected movements, on the basis of both Strategic Option 1 and Strategic Option 2. Then, the team has to select appropriate sources of funds for Maxwell Ltd and make recommendation on the
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gleaned during this recessionary period. Using a 30-year projection with an assumed discount rate of 7% and a growth rate of 9.51% annually this project would yield a positive NPV of $930.08 all other variables being held equal. Modeling this projects cash flows out to 50 years with an annual growth rate of 1% and a keeping the required discount rate at
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PepsiCo EHREN HAYES Dr. Geoffrey Vanderpal GB550 – 02N Kaplan University October 4, 2011 Table of Contents I. Abstract………………………………………………………………………2 II. Meet Pepsico……………………………………………………………….3 III. Capital Structure Issues……………………………………………3-4 IV. Business and Financial Risks……………………………………4-6 V. Growth Opportunities………………………………………………6-7 VI. Modigliani and Miller’s Capital Structure Theory……….…7 VII. Criticisms of the MM Model and Assumptions……………7-8 VIII
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