M&A in the confectionary industry: the evaluation of a proposed combination between Hershey's & Ferrero

The confectionery industry has been subject to a notable consolidation through M&A activities. Such tendency is expected to persist, regarding industry maturity in developed markets – the main responsible for industry status –, along with the absence of a global player with a truly dominant market position. Two confectionery companies that fulfil these criteria are Hershey’s – a listed American player with centralized operations in the US – and Ferrero – an Italian family-owned business essentially focused in Europe. In effect, the existing leadership positions of both players in their respective markets, along with their geographical diversification need – where the knowledge about regional markets is crucial – leads to a possible complementary strategy amongst both. Moreover, a business combination between them would allow to challenge the market leader, taking advantage of greater market opportunities. Therefore, the current project discusses and quantifies the value-creation potential associated with an M&A deal between Hershey’s and Ferrero. In order to achieve consistent results and relevant conclusions, is it applied a methodology framework characterized by the stand-alone and combined companies valuations, considering income and market methodologies, as well synergies estimation, concerning stand-alone business performance forecasting. In accordance, the current business proposal is intended to create an economic value of about 7 billion euro, i.e. an appreciation of 20%, mostly due to operating gains through a combined performance improvement. Despite the economic rational supports the deal’s attainment, there are other issues that could prevent it, namely the disallowance of the current shareholders to share, or even waste, the power controlled hitherto.A indústria de confeitaria tem ostentado uma considerável consolidação através das atividades de M&A, especulando-se a sua continuidade, atentando a atual inércia dos mercados desenvolvidos – e principais responsáveis pelo desenvolvimento da indústria -, bem como a inexistência de uma posição global verdadeiramente preponderante. Duas empresas particularmente embutidas neste paradigma são a cotada americana Hershey's – com a atividade centralizada nos EUA - e a empresa familiar italiana Ferrero – a atuar fundamentalmente na Europa. Com efeito, reconhecendo ambas as posições de liderança nos respetivos mercados de atuação e, simultaneamente, a necessidade de diversificação geográfica, cujo sucesso depende da experiência e conhecimentos regionais, é absolutamente percetível a complementaridade existente entre ambas. Adicionalmente, uma possível combinação permitiria a contestação da liderança global e, consequentemente, uma maior apropriação das oportunidades existentes. O presente projeto visa, portanto, deliberar e quantificar o potencial de criação de valor de uma eventual combinação entre as empresas Hershey's e Ferrero. A expurgação de resultados e conclusões relevantes baseia-se numa estrutura metodológica caracterizada pela valorização dos ativos stand-alone e da empresa resultante, seguindo uma abordagem DCF, bem como a estimativa das sinergias esperadas, recorrendo à prefiguração das atividades numa ótica de stand-alone. No caso vertente, conjetura-se uma criação de valor de c. € 7 mil milhões, respeitante a uma apreciação de 20%, maioritariamente justificada por ganhos operacionais. Embora o racional económico subjacente favoreça a realização da transação, existem outros fatores que poderão obstrui-la, nomeadamente a possível recusa dos atuais proprietários na partilha ou perda do controlo sobre o ativo atualmente detido

Inward and Outward FDI Country Profiles, Second Edition

This second edition contains a series of 77 standardized country profiles dealing with the inward and outward foreign direct investment (FDI) performance of 40 economies. The profiles have been peer-reviewed by a global network of experts. The publication is intended to contribute to the analysis of trends in foreign direct investment and policy issues related to them. More specifically, the individual profiles discuss FDI trends and developments (country-level developments, the corporate players); effects of the recent global crises; and the policy scene. Each profile contains a standard set of tables, including on FDI stocks and flows, sectoral and geographical FDI distributions, the largest M&As and greenfield investments, the principal foreign affiliates (for inward FDI), and the principal multinational enterprises (for outward FDI). The standardized template used to produce the profiles allows cross-country comparisons. The volume is meant to be a reference tool for anyone interested in foreign direct investment

Approximate stock valuation of Grupo Nutresa S.A.

The aim of this document is to propose an Approximate Stock Valuation of Grupo Nutresa SA., supported by the Discounted Cash Flow method in which the present value of future cash flows is determined by discounting them at a rate that reflects the cost of contributed capital (WACC). Throughout the document, an exhaustive analysis is made of the food and beverage industry, and also of the company, to have an overview of the company that is being valued. Finally, a sensitivity analysis is carried out that reveals the most relevant variables in the financial model.El objetivo de este documento es proponer una Valuación Aproximada de Acciones de Grupo Nutresa SA., Sustentada en el método de Flujo de Caja Descontado en el cual el valor presente de los flujos de efectivo futuros se determina descontándolos a una tasa que refleje el costo del capital aportado (WACC). A lo largo del documento se hace un análisis exhaustivo de la industria de alimentos y bebidas, y también de la empresa, para tener una visión general de la empresa que se está valorando. Finalmente, se realiza un análisis de sensibilidad que revela las variables más relevantes del modelo financiero.Magíster en FinanzasMaestrí

Assuming Data Integrity and Empirical Evidence to The Contrary

Background: Not all respondents to surveys apply their minds or understand the posed questions, and as such provide answers which lack coherence, and this threatens the integrity of the research. Casual inspection and limited research of the 10-item Big Five Inventory (BFI-10), included in the dataset of the World Values Survey (WVS), suggested that random responses may be common. Objective: To specify the percentage of cases in the BRI-10 which include incoherent or contradictory responses and to test the extent to which the removal of these cases will improve the quality of the dataset. Method: The WVS data on the BFI-10, measuring the Big Five Personality (B5P), in South Africa (N=3 531), was used. Incoherent or contradictory responses were removed. Then the cases from the cleaned-up dataset were analysed for their theoretical validity. Results: Only 1 612 (45.7%) cases were identified as not including incoherent or contradictory responses. The cleaned-up data did not mirror the B5P- structure, as was envisaged. The test for common method bias was negative. Conclusion: In most cases the responses were incoherent. Cleaning up the data did not improve the psychometric properties of the BFI-10. This raises concerns about the quality of the WVS data, the BFI-10, and the universality of B5P-theory. Given these results, it would be unwise to use the BFI-10 in South Africa. Researchers are alerted to do a proper assessment of the psychometric properties of instruments before they use it, particularly in a cross-cultural setting

Leading Towards Voice and Innovation: The Role of Psychological Contract

Background: Empirical evidence generally suggests that psychological contract breach (PCB) leads to negative outcomes. However, some literature argues that, occasionally, PCB leads to positive outcomes. Aim: To empirically determine when these positive outcomes occur, focusing on the role of psychological contract (PC) and leadership style (LS), and outcomes such as employ voice (EV) and innovative work behaviour (IWB). Method: A cross-sectional survey design was adopted, using reputable questionnaires on PC, PCB, EV, IWB, and leadership styles. Correlation analyses were used to test direct links within the model, while regression analyses were used to test for the moderation effects. Results: Data with acceptable psychometric properties were collected from 11 organisations (N=620). The results revealed that PCB does not lead to substantial changes in IWB. PCB correlated positively with prohibitive EV, but did not influence promotive EV, which was a significant driver of IWB. Leadership styles were weak predictors of EV and IWB, and LS only partially moderated the PCB-EV relationship. Conclusion: PCB did not lead to positive outcomes. Neither did LS influencing the relationships between PCB and EV or IWB. Further, LS only partially influenced the relationships between variables, and not in a manner which positively influence IWB