X= sales we could’ve gotten onour own without help\
For sales up to x, you should pay the market multiple
For sales above x, you should pay ½ the market multiple
What is the value Coke brings?
-create sales, more than what we could’ve done on our own
-get rewarded for the value we create and the extent that the 2 of us come together
How much could you do without our help
2 points:
-Coca Cola provides us data on a lot of other deals to see an appropriate market multiple
-provide Coke with how some-store sales were increasing
What were the new markets for honest tea?
Do we really want to pay more for the sales we made possible?
Counter: without our product, your help wouldn’t have had something to create more sales; what we should do is too split those sales. In 3 years to purchase
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Coke: 40 billion
Honest Tea: 20 million
Proportions: 2,000: 1
Honest tea: 4,000
Coca Cola: 7.99million
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19 cents/bottle vs 11 cents/bottle
8 cents/bottle savings X 100 million = $8 million/year saved
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$7 million Coke to $1 million Honest Tea split?
No!
4 million Coke & 4 million Honest Tea
@ most big companies there is 1 central group that does all the purchasing and the operating units are changed an annual fee to cover the overhead costs of the purchasing group.
2007 Marius Copper bhp billion → Rio Tinton
170 Billion + 100 Billion
3.7 billion/year in value creation
How do you divide it?
View 1: proportion to market caps
bhp : 170B Rio Tinton: 100B
View 2: divide 50/50
1.850 Billion & 1.85 Billion
Bhp billiton + Rio Tinton
56% 44% + 45 billion premium
Merger denied for anti-trust reasons
- How do we share 3.7 billion dollars a year.
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