Reference no: EM132343054
PART A
Required:
i. Referring to the case presented in class, explain the main types of synergies sought by Autogrill in their business acquisitions historically.
ii. Referring to the case discussed in class, explain the reasons why the Manchester United Football Club was an attractive acquisition target for Malcolm Glazer in 2003.
PART B
On 8th March 2017, PPG Industries Inc ("PPG") announced its offer to acquire the Dutch firm Akzo Nobel.
On 20th March, PPG revised its offer by increasing the offer price. On 24th April, PPG increased the offer price again, submitting its final offer to the board of directors of Akzo Nobel.
According to the terms of the final offer, PPG would purchase each ordinary share of Akzo Nobel for a payment consisting of: €61.50 in cash plus 0.357 shares of PPG common stock.
Answer the questions below using the info pack included in the exam materials. Show all your workings.
Required:
i. Describe the proposed form of payment.
ii. Calculate (rounding your answers to two decimals):
1. Offer price per share, in Euros.
2. Offer premium (expressed as a percentage) on Akzo Nobel's pre-acquisition share price.
3. Akzo Nobel's equity value at offer price, in Euros.
4. Akzo Nobel's Enterprise Value (EV) at offer price, in Euros, and briefly explain your choice of inputs.
5. Akzo Nobel's EV / EBITDA2016 ratio, measured at offer price.
iii. Prepare a table showing the sources and uses of funds (in Euros) for the deal, assuming that the cash component of the acquisition price is financed by borrowings.
iv. Estimate the expected % accretion/dilution to PPG's Earnings per Share (EPS) for the year ending 31st December 2018, assuming that the borrowings required to finance the acquisition bear an interest rate of 6.0% (pre-tax).
v. Compare the offer premium with the estimated value of synergies, and explain whether you expect the acquisition to create value for PPG's shareholders. Use a Weighted Average Cost of Capital (WACC) of 8% and a perpetual growth rate of 2% to estimate the value of synergies.
vi. Discuss the possible causes of the change in the market price of PPG's shares and Akzo Nobel's shares between March 7th and April 24th 2017.
vii. Referring to your answers for Part B questions, provide your summary view of the proposed transaction from the perspective of a PPG shareholder.
Note: Need Part B answers with clear workings out explaining the methods.
Attachment:- Key Financial Data.rar