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Barilla IPO-CSI

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Gabriele Chiapparrone

on 7 March 2015

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Transcript of Barilla IPO-CSI

CORPORATE STATEMENT INVESTIGATION Company Structure Holding vs Operating:
Which one is the best to be listed? Valuation Model GOING PUBLIC OR NOT ? CORPORATE STATEMENT INVESTIGATION Carmine Amato
Francesco Carminati
Gabriele Chiapparrone
Alessandra Vernarelli
Chiara Charlotte Zoni HOLDING Holding Discount:
Tendency of markets to undervalue stocks of conglomerate businesses of roughly 20%. Investors prefer to buy stocks in operating companies, which reflect the actual risk-return profile of the business itself. OPERATING OPERATING Growth Rate Estimate WACC Estimate G = (Roc x Reinvestment rate ) < 0 Historical Growth Rate = 4,2% The long term growth rate of the economy (OECD Stat.) is equal to 4% (2% real growth rate, 2% target inflation), which is consistent with the company historical growth rate. Main Competitors Europe Nestlè
Danone
Parmalat
Associated British Food USA Kellogg
Kraft Foods
PepsiCo Inc.
ConAgra Foods
Gen'l Mills
Heinz (H.J.) Multiples The Approach To find out if Barilla should go public the following process will be developed: Compute the Enterprise value for Barilla and the implied share value. Apply the relative valuation approach to obtain the price that its shares would have on the market, if listed. Finally, compare the results and decide if it would be convenient to run an IPO. WACC Estimate WACC=5,64% 2011 2011 2011 The negative reinvestment rate is a temporary phenomenon reflecting lumpy volatile working capital. The current year negative reinvestment rate can be replaced with an average reinvestment rate over the past few years. Ideal to evaluate firms whose growth rate is approximately equal to the one of the economy. (Firms in stable growth) STABLE GROWTH Growth Rate Estimate Enterprise Value (SHARE VALUE = € 269,54) Cost of Equity Cost of Debt Relative Valuation US MARKET EUROPEAN MARKET Conclusion The value we estimated for Barilla is greater than the the value it would have on the market according to the most reliable multiples in our evaluation. For this reason: Barilla should not go public ! Main criteria:
Geographical Area
Business
Market share for Pasta and Bakery (Passport GMID) Gordon model: EV Share Value SHARE VALUE= € 269,54 Source: Capital IQ, Bonds Online.com Kd=3,91% Ke=5,87% *Ratios are median values * * * Beta Estimate Beta=0,50 Q & A
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