Nestlé and Alcon, The Value of a listing - DDIM2011 Shanghai - group 9
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Transcript of Nestlé and Alcon, The Value of a listing - DDIM2011 Shanghai - group 9
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Nestlè and Alcon: “the value of a listing”
Group 9Yu Yu Gao
Yi Ling SunMarta Caccamo
Marta CenniFlavia Assogna
Wei LiuDaniele Corti
Vito Margiotta
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World’s
NUMBER ONE
food company (2000)
WE ARE HERE TO TALK ABOUT
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Alcon = 5.9% of Nestlé Group Total Asset
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• Half of sales outside USA• Phantom stock program• Expectation of STRONG growth• 12% of EBIT of Nestlé Group
• Alcon Enterprise Value?
• Acquired in 1977• World leading ophthalmology
company
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Some good reasons why Alcon
should go alone..
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- Company’s value is underestimated. - Increase the overall understanding of company’s business (especially in terms of financial forecasting accuracy)
- Enhance company liquidity.
Part1 of 2
Financial Reasons
See note for an in-depth explanation and additional reasons.
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Part2 of 2
- Target and attract specialty pharmaceutical investors.
- Focus and leverage on Nestlé core business. - Eager company strategy planning process.
- Decrease agency problems by implementing a managerial stock option plan.
Managerial Reasons
See note for an in-depth explanation and additional reasons.
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Enterprise Value, million USD
Total EV Added = 7.300 Million USD = 7.49%
NOTE: See appendix for further clarification.
97500
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SUGGESTED
IPO
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ALTERNATIVES FOR AN
IPO
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• Swiss market size scarcity of liquidity poor visibility____
• Few large Institutional Investors expert in Ophtalmology
• More than half operations and sales are in the U.S.
• Simple to implement no legal adjustments • Low administrative costs same reporting schedules and investors’announcements
1) SWISS LISTING
SW
ISS L
ISTIN
G
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• Attract U.S. Investors Liquidity Availability
• Closer to headquarter, R&D centre and primary market
• More visibility
• No more royalty deductions
• High costs for reorganization
• Duplication of administrative costs
•New name Alcon Inc.•New American style board
•GAAP Reporting•Dividends in $•List on NYSE
•Conversion of employees compensation plans in stock options
NOTE:Being
perceived as foreigner it is
not recommended.
CONDITIONS:
2) U.S. LISTING
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DU
AL
LIS
TIN
G3) DUAL LISTING
•Expensive procedure- Issuing Cost_____
- Different Accounting Systems_____
•Inconsistent Security Laws
•Flawback Effect.
• Acheive investors of both Swiss and US, provide the biggest market among the four listing method
• Be able to target the specialty pharmaceutical investor
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4) ADR
•Attract international diversified funds instead of the specialty pharmaceutical investors•Be recognised as a foreign company•For issuing shares(Level 3), face strict requirment adhere to direct list•Not good choice for trade in secondary market
•Time lag•Higher commission
• Be Familar with most US instituional investor. Can target sizeable American
capital market.
•Less requirement than direct issuing.
•Easy to trade for investors.
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THE FINAL PLAN
USA LISTING
See note
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Q&A
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APPENDIX
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BEFORE BREAKING DOWN
EBITDA EV/EBITDA Multiple Value
Nestle - Alcon6957.87 a
12.72588540
Alcon 704.13 b 12.725 8960
Total 7662 12.725 97500
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Company%F&B
IndustryEV/EBITDA
Multiples
Cambell 91% 11.02
GeneralMills 100% 18.94
Heinz 100% 10.38
Kellog 100% 11.14
Kraft 100% 5.01
F&B Average 11.30
Company% Pharma industry
EV/EBITDA Multiples
Allergan 63% 22.41
King 86% 24.48
Teva 88% 18.63
Forest 100% 31.47
Pharma Average 24.25
Schweppes is not chosen because of its low involvement in F&B industry. Danone and Unilevel are not included due to incomplete data.
Allergan is not considered because of its low involvement in Pharma industry.
BREAK DOWN
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EBITDA EV/EBITDA Multiple Value
Nestle F&B 6957.87 11.30 78624
Alcon 704.13 24.25 17075.15
L'Oreal _ - 9100a
Total - - 104800
AFTER BREAKING DOWN