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    Provide An Investment Recommendation: Email To Management

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    davin nathan
    The investment is still recommended despite the facility fire lowering the valuation. The fire reduced the implied equity value from $718 million to $654 million. Another bidder valued the company at $650 million, consistent with our revised calculation. Though the margin of safety decreased from 118.8% to 99.1%, it remains above our 20% threshold. The acquisition remains a good opportunity given the bargain price and strategic fit.

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    Provide An Investment Recommendation: Email To Management

    Uploaded by

    davin nathan
    410 views1 page
    The investment is still recommended despite the facility fire lowering the valuation. The fire reduced the implied equity value from $718 million to $654 million. Another bidder valued the company at $650 million, consistent with our revised calculation. Though the margin of safety decreased from 118.8% to 99.1%, it remains above our 20% threshold. The acquisition remains a good opportunity given the bargain price and strategic fit.

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    Task 4 - Davin

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    The investment is still recommended despite the facility fire lowering the valuation. The fire reduced the implied equity value from $718 million to $654 million. Another bidder valued the company at $650 million, consistent with our revised calculation. Though the margin of safety decreased from 118.8% to 99.1%, it remains above our 20% threshold. The acquisition remains a good opportunity given the bargain price and strategic fit.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    410 views1 page

    Provide An Investment Recommendation: Email To Management

    Uploaded by

    davin nathan
    The investment is still recommended despite the facility fire lowering the valuation. The fire reduced the implied equity value from $718 million to $654 million. Another bidder valued the company at $650 million, consistent with our revised calculation. Though the margin of safety decreased from 118.8% to 99.1%, it remains above our 20% threshold. The acquisition remains a good opportunity given the bargain price and strategic fit.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
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    Provide an investment recommendation

    Email to management

    Good morning Anna, I have updated the valuation of Brewing Co., with the expected financial impact of facility fire in FY21. With
    that, the supply chain can be assumed to be interrupted for a whole year as the facility is long to rebuild, with that assumption our
    implied equity value goes down from 718 $m to 654$m. minus 20% from our margin of safety , and now the margin is 99,1%. As
    from the report of another bidding, they valued the Brewing Co., to be 650$m , as expected with our calculation. This is still a
    bargain and a good M&A transaction if looking from the MOS.

    Net present value based on perpetuity growth method


    Preliminary valuation Revised valuation (post-fire)
    Amount % of
    Value Based on 8.5% WACC & 0.5% TGR Amount ($m) % of NPV Value Based on 09% WACC & 01%
    Present Value of Cash flows 409 50.9% TGR ($m) NPV
    PV of Terminal Value 394 49.1%
    Present Value of Cashflows 345 46,7%
    Implied Firm NPV  803 100.0%
    PV of Terminal Value 394 53,3%
    Net debt as of Mar-20E (85)
    Implied Firm NPV   738 100,0%
    Implied equity value  718   Net debt & adjustments (85)
    Implied offer share price (c) 361 Implied equity value   654  
    % premium to current 118.8% Implied share price ($c) 329
    % premium to current 99,1%
    Source: Company Business Plan (January 2020); Equity research; J.P. Morgan analysis

    WORLDWIDE BREWING 1

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