Grand Metropolitan Plc Essay

The share price of $270,000 was significantly higher because the “fair value” as perceived by the dissenters, which accounted for the chance of an IPO. Taking into account the recently traded Kohler Co. share prices, the book value of a share, and the possibility of an IPO greatly inflated what the perceived value of each share should be. While Kohler believed their voting control and ownership structure would remain the same, the shareholders believed otherwise. Because shareholders assumed Kohler would go public, they argued for a higher valuation so as to receive the highest price, and thus profit, in the buyout.  So based on the highest MVE, we picked Masco as the comparable firm of choice. Using Masco’s MVE, $9838.8, and LTM EBIAT, $437.3, we solved for Masco’s P/E ratio, which was equal to 22.5. By multiplying the P/E ratio by Kohler’s LTM EBIAT (22.5 * $93.76), we projected a market value of $2,109,610,000.  To solve for estimated share price, we divided the projected market value by 7,587.89, the number of shares outstanding to obtain an estimated share price of $278,023.47. This estimate is near the $270,000 per share offer price.

The Krispy Kreme, Inc. case investigates the contributing factors that caused this particular darling of Wall Street’s stock to suddenly plummet more than 80% in 2004. In the year 2000, Krispy Kreme went to public and boasts iconic status by became the hottest brand in America. Less than a year after its initial public offering, the company’s shares were selling for 62 times earnings. However, in 2004 the market was shocked by the company’s stocks that plummeted more than 80% over the following 16 months.

We assume that Telus maintains a fixed debt to equity ratio and hence, the calculation will include preferred shares. 5.00 percent of cost in the past cannot be used towards final calculation

Cost of debt was calculated by finding the yield to maturity on 20-year Nike Inc. debt with a 6.75% coupon semi-annually. I assumed Nike Inc. to have a single cost of capital since its multiple business segments (shoes, apparel, sports equipment, etc.) are not very different and would experience similar risks and betas.

equity per share at year-end was $40. If year-end total debt was $120 million, and no

Yields iD = .052586, or 5.2586% on a semiannual basis. Since the cost of debt is normally quoted on a nominal annual basis, we should multiple this semiannual rate by two to get a quoted component cost of 5.2586% × 2 = 10.5172%

Based upon a weighted average cost of capital, the issuance of preferred shares yields an overall, after tax, price of 3.587%. The underlying assumption is that the common shares continue to receive an annual dividend of .23, yield of 4.15%. The alternate consideration of issuing unsecured bonds costs the bank 3.721% for the capital.

The purchase price of Mercury ($131,001) was valued using the average P/E multiples of comparable firms and the average net income of Mercury from 2004-2006 (Fig 8). The comparable firms were chosen based on revenues below $1,000,000. However, Marina Wilderness was disregarded for its negative leverage alongside the size of its equity market value, implying a rapidly expanding firm in contrast to Mercury.

Barcrest's products include some of the most popular and iconic British slots such as Rainbow Riches, Elvis, Cluedo, Cleopatra, Reel King, Cops N Robbers, Cashino and Monopoly. In recent years it has licensed large numbers of pop culture based slots such as Transformers, Jeopardy, Wheel of Fortune, Indiana Jones and Star Wars.

After-tax cost of debt = before-tax cost of debt * (1-tax rate) = 6.33% * (1- 30%) = 4.43%

SIVMED’s cost of debt is 6.60 percent. Using the tax rate of 40 percent and rd = 11.00 percent to equate the value 11*(1-.40) = 6.60 percent.

In Scenario A, the Debt would remain at 0 for good. This results in a D/V ratio of 0 which gives us a WACC of 9.21. Using the WACC to derive the Enterprise value of the company, it is found to be $3.043B. Subtracting the debt of $1.25B, we have a Value of Equity of $1.79B. Subtracting the $765M that is

Grand Metropolitan PLC is the world’s largest wine and spirits seller. It mainly operated in London, USA. In 1991, it beats market expectation with a 4.8% increase in pretax profits, and the company Chairman stated that company’s goal “to constantly improve on”. Despite the great performance in the world recession in 1991, the price of GrandMet shares was 10% below the average price/earnings ratio of the companies in the Standard & Poor’s 500 index. And more important, rumors had that GrandMet, valued at more than $14 billion in the stock market, maybe a takeover target. The management dilemma is to understand why the company’s stock is traded below of what considered being the right price and whether the company is truly

Over the 5 years, Morrisons’s PTY/MV ratio averaged 1.172 while its BV/MV ratio averaged 0.774. The BV/MV ratio is an indication of the disparity between the market value and book value of a firm’s assets. Hence, as Morrisons’s BV/MV ratio is less than 1, it indicates that the corporation is valued at a premium by the stock market. Conversely, Morrisons’s PTY/MV ratio, being greater than 1, suggests that the CRE portion of its assets has suffered from an undervaluation by the stock market.

(Assume that the amount of debt issued to reach the target debt-to-capital ratio is going to be maintained forever. Use the tax rates assumed in the attached Excel file).