Reference no: EM132551534
TAC613 Mergers and Acquisitions Assignment
Group Case Study Guidelines - M&A Pitch
Background - Your group works in the Corporate Development division of Woolworths Limited ("WOW") and the CEO of Woolworths, Brad Banducci, has asked your group to identify a potential acquisition target for Woolworths and to prepare a briefing book or "pitch book" making a case for the acquisition of this target firm by Woolworths.
In selecting the target company, your group should ensure that the proposed acquisition "fits" into the existing overall business plan and strategy of the Woolworths group. Brad holds the view that related (in terms of product and/or market to Woolworths' existing operations) acquisitions would involve less risk. So the potential target should be in the Consumer Staples sector (GICS 30) or in the Hotels, Restaurants & Leisure Industry (GICS 253010).
There are no specific financial parameters for the acquisition other than that the acquisition price must exceed A$500 million, that the target should be an Australian company listed in the ASX and that it can be financed by the company through the issue of debt or equity or from existing resources without exceeding prudent gearing levels in the long term.
Requirements - Your group's task is to prepare a "pitch book" on a proposed takeover containing the following contents: The "pitch book" should be in the form of a series of power point slides. It should be divided into a "presentation" section and an "appendices" section. The slides in the presentation section will not include detailed analyses. They will include summary statements in bullet point format in which you develop your argument with graphic illustrations (tables may also be used as necessary). Detailed analyses should be presented in the appendices. All pages should be printed in "landscape" orientation and should contain appropriate heading. All slides should be numbered.
Valuation - A series of slides will value the target company by itself (stand-alone valuation), and separately value the potential synergies from the acquisition:
DCF Assumptions: you should state the assumptions in one slide in the "presentation" section and explain these assumptions in another slide in the "appendices". The assumptions will include your forecasts about revenue growth, profit margin etc.
Stand-alone DCF analysis of the target (in appendices): follow the standard DCF method.
DCF sensitivity analysis and DCF scenario analysis.
Comparable valuation using comparable listed companies.
Comparable valuation using comparable precedent transactions: use the file 'Recent takeover deals list' on moodle.
Overall standalone valuation and sensitivities/scenarios based on the three above valuation methods: these should be summarised in terms of valuation ranges in the "presentation" section with supporting tables in the "appendices" section
Use a valuation football field (e.g., Exhibit 3.60 in Rosenbaum and Pearl) in the "presentation" section
Sources of synergies --- show calculations on the sources of synergy and value creation. You should have a separate slide that addresses this issue and identifies each of the sources and explains the assumptions regarding the potential value creation from these sources in some detail TAC613 Mergers & Acquisitions.
Synergy valuation and sensitivities/scenarios o You need to identify specific sources of synergies and forecast the expected synergy cash flows:
What are the magnitudes of the synergies?
How long will the synergies last?
You should value the synergies using the DCF method and perform scenario analyses.
Additional information: Since your group will not actually present the report, you need to be specific in your writing: provide sufficient detail to understand the point you are trying to make. Statements should be supported by evidence.
Consult the "Pitch Book" example by Robert Bruner for additional pointers on the necessary analyses and presentation style.
This is the question - Chosen KFC as a target company for acquisition by woolworth, in this question need 5 slides for presentation section and the descriptions (3-4 pages) of those slide should be separate as appendix, 1500 words including slides section and appendix (description of those slides).