Scribd
Upload
189 views11 pages

Syndicate 1 - Yeats Valve and Control Inc

The merger between Yeats Valves and Control Inc and TSE International Corporation will benefit Yeats. TSE is a larger company that can provide more resources for R&D and marketing. The minimum price to ensure profit for Yeats shareholders is $79 million, calculated using a discounted cash flow valuation method, which represents a gain of $34 million or $23.6 per share. This price falls within the typical range seen in acquisitions of companies with $100 million in annual sales. The merger will solve Yeats' succession issues and provide growth opportunities through TSE's larger size and access to new markets.

Uploaded by

rizqighani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
189 views11 pages

Syndicate 1 - Yeats Valve and Control Inc

The merger between Yeats Valves and Control Inc and TSE International Corporation will benefit Yeats. TSE is a larger company that can provide more resources for R&D and marketing. The minimum price to ensure profit for Yeats shareholders is $79 million, calculated using a discounted cash flow valuation method, which represents a gain of $34 million or $23.6 per share. This price falls within the typical range seen in acquisitions of companies with $100 million in annual sales. The merger will solve Yeats' succession issues and provide growth opportunities through TSE's larger size and access to new markets.

Uploaded by

rizqighani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 11

Yeats Valve and

Control Inc
Syndicate 1:
Andika Pitono 29120575
M. Nadhif Arsyad 29120381
Rizqi Ghani Faturrahman 29120382
Case Background
● Yeats Valves and Control Inc is a manufacturer of specialty valves and heat exchangers.
● The company generates half of its revenue from the aerospace industries. The company often received a
contract from the government.
● The company has 560 stockholders, 20% of them is owned by Auden Company, 40% owned by Bull
Yeats (CEO & Founder, 10% for the families) and 30% for the public.
● Bill yeats want to sell his company because he is near his retirement age, and find it difficult to find a
successor for the company.
● Yeats Valve and Control needed a wealthy partner for their R&D, and someone who has access to a large
marketing and distribution network to tap more market segment, otherwise the company will ceases to
exist.
● TSE International Corporation is a manufacturer of ranging products for advanced industrial components
such as cables, nuts and bolts, up to casting and forging equipment. The company sell their products to
aerospace and nautical companies.
● In early May 2000 Yeats Valves and Control Inc and TSE International Corporations are on the final
steps before entering into an acquisition deal.
● TSE will acquire Yeats, and yeats will become an independent operating division at TSE
● Bill Yeats will become board of directors in TSE, and TSE will retain top management and employees.
Question

Will the merger benefit Yeats? If yes what is the


minimum price to ensure Yeats shareholders profit?
Proposed Solution

• The minimum price of a merger is the target company’s enterprise value


under an assumption of independent operation.
• The enterprise value can be calculated using several method such as DCF
and multiples valuation
DCF Valuation of Yeats (1/2)
DCF Valuation of Yeats (2/2)
Multiple Valuation of Yeats
Valuation Summary
Similar transactions
Conclusion
• The merger will benefit Yeats because:
• The merger will provide Yeats with more opportunities ahead with TSE. For example,
Bill yeats problem about the future of the company will be solved. Since TSE is a
larger company than Yeats, thus able to provide more R&D budget, and more marketing
access.
• TSE will retain the top management team and employee, and provide them with better
salary.
• Minimum price
• Using DCF method, the minimum price should be $79mio or a 1.75x common to
common stock ratio. With this price, the shareholders will have a gain of $34mio or
$23.6 per share
• The minimum price is within the range for $100mio sales company acquisition from
previous deal
Thank You

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy