Eskimo Pie 1. What is your estimate of the value of Eskimo Pie Corporation as a stand alone company? First we are going to consider the projected growth rate of Eskimo Pie Corporation using the sustainable growth model. Sustainable Growth Model (SGM) = ROE * (1-PR) ROE = Return on Equity PR = Payout Ratio ROE = Net Income/ Stockholders Equity = 2526 / 19496 = 12.95% PR = Dividends per Share / Earnings per Share = .40 / .76 = 52.6% SGM = 12.95% * (1-52.6%)
Premium Inventory
Stand-Alone Value There are many valuation methods that could be used to evaluate this company. Finding a method that valuates the stand-alone value is difficult. The stand-alone value should be dependent upon the firm’s own assets and projected future income. We decided to evaluate this company based upon two methods: The Discounted Cash Flow Method and the Comparable Companies Method. Discounted Cash Flow Method takes the forecast free cash flows during forecasted horizon. Then we estimate
Premium Discounted cash flow Generally Accepted Accounting Principles Weighted average cost of capital
acquired ice-cream Eskimo Pie Corporation from Nelson in 1924. Reynolds Metals retained Goldman Sachs to sell Eskimo Pie‚ 6 bids have received. Nestle Foods offer the Reynolds Metals the highest bid at $61 Million. However‚ due to the long-standing relationship with Reynolds and without the complications and conditions that Nestle wanted to attach to its purchase agreement‚ Reynolds Metals has taken into consideration the IPO alternative proposed by Wheat First rather than acquiring by Nestle Foods. This
Premium Goldman Sachs H. J. Heinz Company Generally Accepted Accounting Principles
Eskimo Pie Corp. 1. What is your estimate of the value of Eskimo Pie Corp as a stand alone company? Luckily‚ I checked my e-mail this afternoon‚ so using a WACC of 16%‚ an FCF of $4‚004‚000‚ and $13‚000‚000 cash reserve (pg 593) I came up with this table in excel. growth rate (g) value total after adding cash $13 mil 0.06 42‚442‚400.00 55‚442‚400.00 0.07 47‚603‚111.11 60‚603‚111.11 0.08 54‚054‚000.00 67‚054‚000.00 0.09 62‚348‚000.00 75‚348‚000.00 0.10 73‚406‚666.67 86‚406‚666.67
Premium Company The Sale Corporation
Eskimo Pie 1. What is your estimate of the value of Eskimo Pie Corporation as a stand-alone company? In my opinion‚ Goldman’s estimate of Eskimo Pie’s worth as a stand-alone company was a bit too low. Although they did include somewhat of a premium over Eskimo’s 1990 sales ($47 million in sales versus $57 estimated worth)‚ I still think that it is worth more than that‚ for a couple reasons. First‚ I think that Eskimo Pie’s market share and market presence commands a higher price than what Goldman
Premium Approximation Estimation Sales
Questions: “Eskimo Pie Corporation” You are responsible for handing in written answers to the following questions drawn from the Eskimo Pie Corporation case. You can work with others on this assignment‚ but each individual must hand in their own set of answers. 1. Why do the managers of Eskimo Pie want to find an alternative to the Nestle acquisition? Generally‚ there were two reasons the managers of Eskimo Pie want to find the alternative. First‚ the manager didn’t want to lead to
Premium Management Corporation
Eskimo Pie Corporation Eskimo Pie: IPO Vs. Buyout 1991 Student Report Prepared on 03/29/2015‚ by: Parker Scott – u0866636 Eskimo Pie Corporation Eskimo Pie: IPO vs. Buyout 1991 EXECUTIVE SUMMARY In early 1991‚ Reynolds Metals Company had a decision to make. Goldman Sachs investment bank has facilitated a potential acquisition of Reynolds’ subsidiary‚ Eskimo Pie to Nestle Corporation. Throughout the years‚ Eskimo Pie has been independently operated and this acquisition would consolidate
Premium Reynolds Metals
Corporate Governance Eskimo Pie Corporation Copyright © 1992 by the President and Fellows of Harvard College. Harvard Business School case 293-084. In early 1991‚ Reynolds Metals‚ the makers of Aluminum Foil and other aluminum products‚ decided to sell its holding of Eskimo Pie‚ a marketer of branded frozen novelties. Reynolds had few interests outside its aluminum and packaging business‚ and the Eskimo Pie Corporation‚ with roughly $47 million in sales‚ accounted for less than 1% of Reynolds revenues
Premium Marketing Strategic management Management
Eskimo Pie Corporation Introduction Reynolds Metals is the majority owner of the ice scream company Eskimo Pie Corporation and has decided to sell this company. Nestle Foods provided the highest offer of $61 Million. Due to delays of the Nestlé’s purchase‚ Reynolds Metals has take into consideration the IPO proposal of David Clark‚ president of Eskimo Pie Corporation‚ rather than selling the company to Nestle Foods (Case Study‚ 2001). This analysis will identify the current value of the
Premium Discounted cash flow Cash flow Weighted average cost of capital
Nestlé’s offer of $61 million for its holdings of Eskimo Pie. The crux of the issue is whether or not the projected income from a proposed Initial Public Offering (“IPO”) by Wheat First Securities (“Wheat First”) is reasonable and will actually result in proceeds between $61 and $68 million to Reynolds‚ the Reynolds family and the Reynolds foundation‚ as projected. To get at this question‚ this paper will seek to value Eskimo Pie as a stand-alone company‚ if the IPO option is selected. Discount Rate:
Premium Free cash flow Generally Accepted Accounting Principles Cash flow