1 / 6

December 12, 2012

Mattel Acquisition of Hasbro. Presented to: FIN5190 Presented by: Yuan Zou Kyle Patino. December 12, 2012. Project Overview . Created a hypothetical acquisition scenario. Selected two S&P 500 companies. Mattel (“MAT”) as the acquirer with a market cap of 12B.

paley
Download Presentation

December 12, 2012

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Mattel Acquisition of Hasbro Presented to: FIN5190 Presented by: Yuan Zou Kyle Patino December 12, 2012

  2. Project Overview • Created a hypothetical acquisition scenario. • Selected two S&P 500 companies. • Mattel (“MAT”) as the acquirer with a market cap of 12B. • Hasbro (“HAS”) as the acquiree with a market cap of 4.9B. • Both companies are involved in the design, manufacturing and marketing of toys. • Assumption is that there are synergies and cost reductions to be garnered. • Goal is to utilize different modeling techniques to gauge the valuation and scenario analysis to determine if the acquisition strategy should be pursued.

  3. Company Overviews Mattel • Share Price (as of 10/2/2012) $ 35.43 • Market Capitalization $ 12,077,000,000 • Headquarters El Segundo, California • Notable Brands Mattel, Fisher Price, American Girl, Thomas & Friends • Sales Distribution 76% US/Europe Hasbro • Share Price (as of 10/2/2012) $ 37.80 • Market Capitalization $ 4,922,700,000 • Headquarters Pawtucket, Rhode Island • Notable Brands Transformers, My Little Pony, Play-Doh • Sales Distribution 38.5% North America 3

  4. Project Objectives • Our project objectives include application of financial techniques such as the following: • Establish the WACC for Hasbro • Create a proforma and enterprise value for Hasbro • Establish a stock exchange ratio for an all-stock transaction • Consolidate the financial statements of Hasbro and Mattel, taking into account Goodwill accounting treatment • Run scenario analysis of the combined entity with a base case, economic recession and economic growth • Run crystal ball simulation to gauge the impact on the forward looking stock price 4

  5. Modeling Techniques • Weighted Average Cost of Capital Calculation • Company Valuation • Consolidated financial statements and pro forma spreadsheet • Crystal ball application 5

  6. Conclusion • Based on an 8.66% WACC for Hasbro, we conclude the enterprise value net of debt (purchase price) to be $2,984 million. • Implied share price of $22.91 vs current share price of $37.80. • Hasbro is overvalued. • We assume conservative sales growth of 2%, but assume a 20% reduction in G&A expense as the result of cost saving synergies and headcount reduction. • Once consolidated, base case implied enterprise value is $21,022 million with an implied share price of $41.26 (10.35% increase). • Recession case (negative 1% sales growth), implied enterprise value is $16,652 million with an implied share price of $30.95 (17.22% decrease). • Growth case (positive 5% sales growth), implied enterprise value is $25,914 million with an implied share price of $52.80 (41.21% increase). • Crystal ball simulation ranges from $ 36.70 to $ 45.86 price per share. 6

More Related