This instance requires practical application of the most popular business valuation methodologies (discounted cash flow evaluation, peer companies multiples and similar transactions analysis) in order to identify a range of mutually satisfactory exchange ratios. Furthermore, this case study requires the students to carry out a critical appraisal of the tacit bid premium. The evaluation emphasizes on the complicated negotiations of the scheme of arrangement (amalgamation) between commodity dealer giant, Glencore, and diversified miner, Xstrata.
The case wants the knowledge of basic valuation methodologies together with the ability to identify the strategic synergies resulting from the integration. Additionally, the case requires an understanding of the bid premium determines the distribution of synergies between the parties in all-stock transactions.
The learning objective which the case offers is the possibility to present to pupils different combinations of component A, part B and part C. All pertinent information required to perform a complete valuation and to ascertain a variety of exchange ratios for the transaction is gathered in an spreadsheet that students can use to ascertain the value of the combined business post-merger.
It provides information on peer firms and precedent trades in addition to advice on bidder and objective historical share prices and business financials.
Publication Date: 06/09/2014
This is just an excerpt. This case is about Accounting
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