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Merger & Acquisition Proposal. Team 1 Abhishek Singh | Efesa Origbo | Shen Ge | Udayan Sathe April 2011. Outline. Profile: Nestle SA Industry Analysis: Nutrition Acquisition Targets Potential Targets Recommended Target Strategic Rationale for Acquisition Valuation Timelines

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merger acquisition proposal

Merger & Acquisition Proposal

Team 1

Abhishek Singh | Efesa Origbo | ShenGe | UdayanSathe

April 2011

outline
Outline
  • Profile: Nestle SA
  • Industry Analysis: Nutrition
  • Acquisition Targets
    • Potential Targets
    • Recommended Target
  • Strategic Rationale for Acquisition
  • Valuation
  • Timelines
  • Financial & Risk Analysis
  • Conclusion
profile nestle sa
Profile: Nestle SA
  • Largest food and beverage company in the world
  • Headquartered in Vevey, Switzerland
  • 278,000 employees
  • 2010 Revenue: CHF 109.7B (USD 124.3B)
  • 4 Globally Managed Businesses
    • Nestle Nutrition
    • Nestle Waters
    • Other Food and Beverages
    • Nestle Pharma
financial performance nestle
Financial Performance: Nestle

Million USD

Source: Mergent Online

nestle stock performance
Nestle Stock Performance

Source: Yahoo! Finance

five forces analysis kid s nutrition
Five Forces Analysis: Kid’s Nutrition

Potential Entrants

Suppliers

Inter-Firm

Rivalry

Buyers

Low

Substitute Products

Moderate

High

key markets for baby food usd
Key Markets for Baby Food (USD)

Source: Mintel Global Market Navigator

baby formula market share china
Baby Formula Market Share: China

Source: Mintel Global Market Navigator

recommended target
RECOMMENDED TARGET

Mead Johnson Nutrition

profile mead johnson nutrition
Profile: Mead Johnson Nutrition
  • A global leader in pediatric nutrition
  • Portfolio of 70+ products to mothers, health care professionals in over 50+ countries
  • Enfamil, the company's flagship brand commanded 11.7% of the $22.3 billion market 
  • 10.2% market share of China with an annual rise of 15%
  • Product Portfolio
    • Infant formula
    • Children’s nutrition
financial performance mead johnson
Financial Performance: Mead Johnson

Million USD

Source: Mergent Online

acquiring mead johnson
Acquiring mead johnson

Strategic Rationale

strategic fit

Specialty Infant Formula

Strategic Fit

Kid’s Nutritional Products

Infant Foods

Mead Johnson

Infant Formula

Nestle Nutrition

benefit to nestle
Benefit to Nestle

Source: Mergent Online

benefits to mead johnson
Benefits to Mead Johnson

Global Footprint – Mead Johnson Nutrition

Source: Mead Johnson Corporate Website

benefits to mead johnson1
…benefits to Mead Johnson

Global Footprint – Nestle

Source: Nestle Corporate Website

benefits to mead johnson2
…benefits to Mead Johnson

Source: Mergent Online

valuation of acquisitions
Valuation of Acquisitions

Source: Mint Global

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization

acquisition timelines
Acquisition Timelines

Source: Mint Global

conclusion
Conclusion
  • There is the profitable infant formula market in Asia in which Nestle does not have a strong presence
  • Mead Johnson is the premiere brand for infant formulas in the US and is a dominating presence in China
  • The acquisition of Mead Johnson by Nestle will provide significant market power, and increased growth rates of revenue and net earnings.