SYNERGY VALUATION OF PT INDOFOOD CBP SUKSES MAKMUR IN ACQUISITION TOWARDS PT PEPSI COLA INDOBEVERAGES

• Main Author: Angelica Kurniawan, Vinley
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/78743
• Institution: Institut Teknologi Bandung

Mergers and acquisitions have been one of the most popular growth strategy for company to diversify its business network. From the strategic perspective, the main focus is about whether and how acquiring company will restructure the company, and how this activity will contribute to company's competitive advantage. After acquisition process completed, company will going through expansion and also gaining more competitive advantages of what it doesn’t have before besides minimizing weakness by complementing with each other. The evaluation of a merger or acquisition is measured by looking at acquiring company's capacity to bring in good conditions of integration to the acquired enterprise. An efficient company valuation including three considerations for company (Peterson 1990). The two of them are related to firm assets and firm earning power, represents with both earnings and cash flows. The third component is about the company’s uniqueness, which determines the risks and desirability of firm’s securities holdings. This research is conducted to evaluate whether decision made by PT Indofood CBP Sukses Makmur was the right thing to do to increase firm value through acquiring PT Pepsi Cola Indobeverages. Benefit consideration gained by PT Indofood CBP Sukses Makmur for this takeover are cost saving, time saving, and all resources ready to be used by the time this acquisition was established. It was a great opportunity for PT Indofood CBP Sukses Makmur as new player in Indonesian beverage market to also earned business network chain that PT Pepsi Cola Indobeverages used to have. Synergy value for this acquisition activity calculated from information in press-release news that has become expectation for company future target has resulted increasing. In 2012 synergy value amounts in Rp3,862,409,077,069 has increased to amounts Rp4,169,928,210,000 in 2015. Method chosen for payment of this acquisition activity was Cash-Offer with NPV amounts Rp3,832,115,754,137, and it was the right thing to do since it resulted higher return than Script-Offer with NPV amounts Rp3,790,021,858,841. In Common-Size Analysis, PT Indofood CBP Sukses Makmur Net Profit Margin decreased through years due to increased operating costs. Biggest contributor in Net Profit is Noodle division, and as this division has become mature business, PT Indofood CBP Sukses Makmur seek for opportunity in beverage market to add diversification in its business portfolio to anticipate future risk. Moreover, feasibility study of this proposed acquisition activity also tested with NPV and IRR calculation. NPV result for this proposed acquisition activity was Rp3,832,115,754,137 which means it was economically feasible and should be accepted. IRR result was 25.72%, higher than its Cost of Capital 23.96%, which means this project is potentially feasible to increase value of the firm and should be accepted. According to Pro-Forma Income Statement, if there is no change in annual increasing of percentage of sales, company’s target to achieve net profit of Rp 5 trillion in year 2017 would not be able to be achieved. To suppress cost, PT Indofood CBP Sukses Makmur should targeting optimal sales target and efficient operating activity in which cost can be minimized. This way, Operating Cost for each product can be reduced efficiently.