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Merger & Acquisition Proposal

Merger & Acquisition Proposal. Team 1 Abhishek Singh | Efesa Origbo | Shen Ge | Udayan Sathe April 2011. Outline. Profile: Nestle SA Industry Analysis: Nutrition Acquisition Targets Potential Targets Recommended Target Strategic Rationale for Acquisition Valuation Timelines

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Merger & Acquisition Proposal

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  1. Merger & Acquisition Proposal Team 1 Abhishek Singh | Efesa Origbo | ShenGe | UdayanSathe April 2011

  2. Outline • Profile: Nestle SA • Industry Analysis: Nutrition • Acquisition Targets • Potential Targets • Recommended Target • Strategic Rationale for Acquisition • Valuation • Timelines • Financial & Risk Analysis • Conclusion

  3. Profile: Nestle SA • Largest food and beverage company in the world • Headquartered in Vevey, Switzerland • 278,000 employees • 2010 Revenue: CHF 109.7B (USD 124.3B) • 4 Globally Managed Businesses • Nestle Nutrition • Nestle Waters • Other Food and Beverages • Nestle Pharma

  4. Financial Performance: Nestle Million USD Source: Mergent Online

  5. Nestle Stock Performance Source: Yahoo! Finance

  6. SWOT Analysis: Nestle

  7. Industry analysis

  8. Five Forces Analysis: Kid’s Nutrition Potential Entrants Suppliers Inter-Firm Rivalry Buyers Low Substitute Products Moderate High

  9. Key Markets for Baby Food (USD) Source: Mintel Global Market Navigator

  10. Baby Formula Market Share: China Source: Mintel Global Market Navigator

  11. ACQUISITION TARGETS

  12. Evaluation Matrix

  13. RECOMMENDED TARGET Mead Johnson Nutrition

  14. Profile: Mead Johnson Nutrition • A global leader in pediatric nutrition • Portfolio of 70+ products to mothers, health care professionals in over 50+ countries • Enfamil, the company's flagship brand commanded 11.7% of the $22.3 billion market  • 10.2% market share of China with an annual rise of 15% • Product Portfolio • Infant formula • Children’s nutrition

  15. Financial Performance: Mead Johnson Million USD Source: Mergent Online

  16. Financial Performance: Mead Johnson Source: Yahoo! Finance

  17. SWOT Analysis: Mead Johnson

  18. Acquiring mead johnson Strategic Rationale

  19. Specialty Infant Formula Strategic Fit Kid’s Nutritional Products Infant Foods Mead Johnson Infant Formula Nestle Nutrition

  20. Benefit to Nestle Source: Mergent Online

  21. Benefits to Mead Johnson Global Footprint – Mead Johnson Nutrition Source: Mead Johnson Corporate Website

  22. …benefits to Mead Johnson Global Footprint – Nestle Source: Nestle Corporate Website

  23. …benefits to Mead Johnson Source: Mergent Online

  24. Valuation & Timelines

  25. Valuation of Acquisitions Source: Mint Global EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization

  26. Acquisition Timelines Source: Mint Global

  27. Financial & risk analysis

  28. Income Statement: Post Acquisition

  29. Risk Analysis M H M H M H M M

  30. Conclusion • There is the profitable infant formula market in Asia in which Nestle does not have a strong presence • Mead Johnson is the premiere brand for infant formulas in the US and is a dominating presence in China • The acquisition of Mead Johnson by Nestle will provide significant market power, and increased growth rates of revenue and net earnings.

  31. Thank you!

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