SYNERGY AND STOCK VALUATION (CASE STUDY: ACQUISITION OF PT AGINCOURT RESOURCES BY PT UNITED TRACTOR TBK)

• Main Author: Zul Hakim, Aji
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/46256
• Institution: Institut Teknologi Bandung

PT Agincourt Resources is a private firm engaging in mining and exploration. The firm sole operation is Martabe Gold Mine, located in South Tapanuli, North Sumatra. As of 2018, Martabe’s mineral reserved is 8,1 million ounces of gold which make Martabe as one of the largest gold mine in Indonesia. Acquisitions might provide a shortcut for United Tractor to their strategic objective, by acquiring PT Agincourt Resources. Through diversification, it could minimize the expose of thermal coal market volatility. Gold price is less volatile than thermal coal, even the demand for the gold is higher when geopolitical and macroeconomic risks intensified like today. After the acquisition, gold mining segment already contributed 10% to the revenue of United Tractors in 2019. Synergies from combined firm including operational and financial synergies. From operational synergies, the combined firm may be able to reduce cost and more profitable. Then, broader geographic coverage could enhancing United Tractors name recognition and brand awareness. Moreover, United Tractors is extending their business into new segment and gaining quick access to resource and capabilities of PT Agincourt Resources. While, financial synergies payoff could take in the form of either higher cash flows or a lower cost of capital (discount rate). The value of synergy is Rp4,3 billion and exceed the PT Agincourt Resources firm’s value by 25%. Therefore, the acquisition of PT Agincourt Resources by United Tractors is successful. Furthermore, the result of the target price by absolute valuation is Rp25.979/share, therefore there is a potential upside by 22%, the recommendation from absolute valuation is BUY.