VALUATION OF STOCKS AND ACQUISITION SYNERGY (CASE STUDY: ACQUISITION OF ECO PAPER INDONESIA BY PT ALKINDO NARATAMA TBK)

• Main Author: Made Devantara, I
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/46035
• Institution: Institut Teknologi Bandung

President of china’s regulation for environment protection has suppress china’s domestic paper production volume while the domestic demand still grows, making the opportunity for foreign country to export paper to china wide open. Seeing this opportunity and to assure availability of raw material for its production, PT Alkindo Naratama Tbk acquires PT Eco Paper Indonesia, its main supplier. After the acquisition, the share price on 7th February 2019, rapidly increased from IDR 404 per share to its all-time high by IDR 2,500 per share on February 19th, but then decreased to its initial price by IDR 404 per share in March 4th. This study goal is to value the synergy value in PT Alkindo Naratama after its acquisition on PT Eco Paper Indonesia and to find its share intrinsic price after the acquisition. The synergy value measured with subtraction between combined and standalone firm value. The valuation of firm value used for synergy value and equity value for share intrinsic price were measured using Discounted Free Cash Flow. The impact of synergy is the efficiency in operation that resulted in IDR 19,106,679,009 synergy value. The intrinsic price share from stock valuation is IDR 487 which is 28.37% upside from the current value. In the sensitivity analysis the significant factor for Synergy value is paper sales and beta, as for the intrinsic value of the share is equity risk premium and processed paper sales. In the Monte Carlo simulation, the synergy value have 25.47% of negative synergy and 74.52% positive synergy, as for the share, the chance to sell (15% downside form current market value is 4.52%, the chance to buy (upside 15%) is 63.91% and the chance to hold is 34.47%. Recommendation for investor are to buy with the target price of 487 IDR. Recommendation for the company are to increase capacity expansion, efficiency optimization and market expansion.