Eskimo Pie (Stand Alone Value)

Statement of Purpose: The purpose of this analysis is to determine if Reynolds Metals (“Reynolds”) should accept Nestlé’s offer of $61 million for its holdings of Eskimo Pie. The crux of the issue is whether or not the projected income from a proposed Initial Public Offering (“IPO”) by Wheat First Securities (“Wheat First”) is reasonable and will actually result in proceeds between $61 and $68 million to Reynolds, the Reynolds family and the Reynolds foundation, as projected. To get at this question, this paper will seek to value Eskimo Pie as a stand-alone company, if the IPO option is selected.

Secondary information is collected for this case. This case study limited only one techniques of financial analysis that is Ratio Analysis and also taken a single company. Thus the conclusion of the analysis carried out in a professional manner will be able to correctly describe the evaluation of the company and to substantiate the user’s decisions.

After making assumptions about various valuation metrics and figures, we were able to value paramount as a stand-alone company using both the APV and WACC methods.

Our estimated cost of capital, 20.81%, is lower than Ricketts’ expected return, 30%-50%, thus the investment is worthy. However, it’s higher than other pessimistic members’ expected return, 10%-15%, making the decision more complex and requiring further valuation。

  As  for  this  case,  we  decided  to  address  the  companies  that  were     2   most  similar  in  size  to  MCC  and  that  were  most  recent  since  the  industry  is  rapidly   evolving,  and  therefore,  valuations  are  also  rapidly  changing.     Discounted  Cash  Flow  Analysis       Finally,

He can use two methods to determine the value of the company: discount cash flow (DCF) approach and /or comparison with similar companies, which are publically traded.

in our calculations, as this company exhibited dramatic value differences to others in the sample, (likely to skew our results and prove misleading). Using the average of the revised sample field for each ratio, we inserted Torrington’s values where appropriate to generate an entity value. The findings generated two values for Torrington, 606 million and 398 million. Taking the average of these two numbers, Torrington exhibited a relative value of 502.41 million. Because of the lack of related information given in the case, and the often large differences in measures amongst competitors, different capital structures, internal management strategies, there remained many unknowns in our model. We decided it would be best to use this valuation to reaffirm our assumptions in our DCF valuation. (Please see exhibits)

The free cash flow method is used to gauge “a company’s cash flow beyond that necessary to grow at the current rate… [to ensure companies] make capital expenditures to continue to exist and to grow” (Drake, n.d.). Calculation of free cash flows utilizes various components, including a firm’s value, cash flow forecasts, a firm’s capital structure, the cost of capital, and/or discounted cash flows.

Nestle would want to acquire Eskimo Pie due to the synergy that is created with the purchase of Eskimo Pie. Simply, Nestle would be able to use their existing supply chain to help and advance Eskimo Pie´s causes. For instance, since Nestle´s current ice cream novelties are sold in a wide range of stores, adding the Eskimo Pie branded ice cream novelty would not add much in the way of cost to providing the product for customers, as a matter of fact, it is likely to create added value in distribution, costing the same amount of money to distribute the combined product lines as it would to continue to distribute the current product lines.

This analysis will identify the current value of the company at a stand-alone value and explain why Nestle Food would want to buy this company and the synergies involved for their reasoning. We will also discuss who will benefit if Reynolds Metals were to sell to Nestle or were to create an IPO.

We valued the company using four different methods; Net Present Value, Internal Rate of Return, Modified Internal Rate of Return and Profitability Index. We began with the Net Present Value, or NPV, calculation. NPV values an investment’s profitability based on the projected future cash inflows and outflows of the investment, discounted back to present value using the WACC. The calculations for NPV are presented in Appendix 2. We started by separating cash inflows and outflows by each year. We used Bob Prescott’s estimates for the revenue per year and related operating costs of cost of goods sold as

Nestlé Company also cooperates with local government to provide technical assistance to farmers in planting and harvesting crops. In a way of farmer get income and Nestlé Company get fresh raw materials to produce their food locally and save cost from imported raw materials. Consumers also could enjoy local productions with lower price. When more consumers buy the productions, Nestlé Company will gain more profit from the

It is determined that the company worth is $856,518 with a share price of $351.03 per value as per the discounting dividend cash flow valuation approach..In appraising the anticipated premerger performance of the company, the weighted average cost of capital is computed; the worth of the WACC for FVC is 9.2% as depicted in

As we all know competition encourages growth and it was part of the things that contributed to the growth of the Company. There are two companies that were, and still major competitors to Associated British Foods PLC. The companies are as follows: Nestle S.A. and TESCO PLC. Nestle S.A. is a swiss multinational and packaged food company that manufactures and markets a wide range of food products. The Company's products include milk, chocolate, bottled water, coffee,

The methods for valuing companies can be classified in six groups: MAIN VALUATION METHODS BALANCE INCOME MIXED CASH FLOW VALUE OPTIONS SHEET STATEMENT (GOODWILL) DISCOUNTING CREATION .Book value . Multiples Classic Equity cash flow EVA Black and .Adjusted .PER Union of Dividends Economic Scholes . Sales Free cash flow Investment value European profit .Liquidation .P/E EBITDA Accounting Capital cash flow Cash value option value .Other Experts APV added Expand .Substantial multiples Abbreviated CFROI the project value income Delay the others investment Alternative uses 2.1 Balance sheets – Based methods (shareholders’Equity) These methods seek to determine the company’s value by estimating the value of its assets. These are traditionally used methods that consider that a company’s value lies basically in its balance sheet. They determine the value from a static viewpoint, which, therefore, does not take into account the company’s possible future evolution or money’s temporary value. Neither do they take into account other factors that also affect the value such as: the industry’s current situation, human resources or organization problems, contracts, etc. that do not appear in the accounting statements. Some of these methods are the following: Book value, adjusted book value,